Lord McKenzie of Luton: My Lords, it is with special pleasure and a little surprise that I find myself opening today's debate. The Government's economic objective is to build a strong economy and a fair society where there is opportunity and security for all. The long-term decisions that the Government have taken—giving independence to the Bank of England, new fiscal rules and a reduction in debt—have created a strong platform of economic stability.
	For the first time in half a century, Britain has been growing faster and for longer than any other G7 country. The UK was the only G7 economy to avoid any quarters of negative growth between 2001 and 2003, and the Government have delivered 51 consecutive quarters of growth, the longest period of continuous economic growth on record. The UK continues to enjoy the lowest sustained inflation for 40 years, with unemployment and interest rates low and stable. This stability allows business, individuals and the Government to plan more effectively for the long term, improving the quantity and quality of investment and helping to raise productivity.
	As the world economy has strengthened, although not uniformly, UK growth has become more balanced. I am sure your Lordships will have noticed the recent figures on manufacturing output growth, but let us not forget that these figures can be highly volatile. The survey of manufacturing conducted by the Chartered Institute of Purchasing & Supply showed manufacturing output growing for the 23rd consecutive month in April.
	The key to a sustained improvement in manufacturing is the rising level of business investment. Business investment, exports and manufacturing output have all risen in the past year. Indeed, business investment growth last year was the strongest for six years, while manufacturing growth was the strongest for four years. For a second year, the forecast is for GDP growth of 3 to 3.5 per cent. We shall doubtless hear challenges to those forecasts but I am sure that I do not need to remind your Lordships of this Government's excellent forecasting record. It is not only the Government's word at stake; analysis by the European Central Bank shows that the UK had the best performance of all member states in forecasting GDP growth between 1999 and 2003.
	Some contributors to this debate and some other commentators may express worries about both household and government indebtedness. The official labour market figures published today show that since 1997 we have created 2,200,000 jobs—a remarkable achievement. Unemployment has been below 1 million for four years, having reached 3 million in 1993. Between spring 1997 and autumn 2004, the number of workless households fell by 308,000 and the number of children in workless households fell by 477,000.
	Interest rates, at 4.75 per cent, remain low by historical standards. Mortgage rates are close to their lowest levels since the 1950s and households are benefiting from robust growth and employment. Real disposable income grew by 1.5 per cent during the year to 2004, quarter four, and by 2.8 per cent a year on average since 1997, and households' net wealth is up almost 70 per cent since 1997. The increase in household indebtedness is therefore grounded on strong economic fundamentals.
	Total consumer spending, of which retail sales represent a third, is expected to slow this year as the economy continues to rebalance. However, strong macro-economic fundamentals will continue to provide support for consumption expenditure to go forward. At present, consumer confidence remains well above its long-term average and the housing market continues to show signs of stabilising.
	Concerns have been raised regarding an alleged black hole in the public finances. In 1997, the Government created a framework for the management of fiscal policy. The Budget 2005 projections for the public finances show that the Government are meeting their strict fiscal rules over the economic cycle on the basis of cautious assumptions—I stress "cautious assumptions"—with public finances remaining sound and sustainable in the long term. Public sector debt is projected to remain low and stable, stabilising at a level well below the 40 per cent ceiling. In 2004, along with Canada, the UK was the only G7 country with net debt below 40 per cent of GDP. Public sector borrowing is forecast to be 2.9 per cent of GDP in 2004–05, or £34.4 billion. That compares favourably with historical levels of net borrowing, which peaked in 1993–94 at 7.8 per cent of GDP, and is equivalent to net borrowing of around £90 billion at current prices.
	The use of cautious audited assumptions and tough decisions taken in the past on tax and spending mean that the Government have been able to allow fiscal policy to support monetary policy and safeguard investment in priority public services, ensuring medium-term sustainability. The domestic stability delivered by the Government's macro-economic framework has enabled the UK economy to cope well with the significant challenges that have faced the world economy over recent years and will enable us to cope well with new challenges as they arise.
	We are enjoying sustained economic growth, as I have emphasised. However, with the challenges emerging, particularly from China and India, whose growth rates are three times higher than any in Europe, and whose potential customer markets are five times bigger with wages close to one-tenth of ours, we cannot ignore the growing elements of international competition. We all recognise that there is a fiercely competitive global environment and that the challenge for all nations is how to create knowledge, to tap it and then to transform it into wealth and jobs.
	Britain now has one of the most open competition policies in the world. We are the most active advocate of free trade. Today the enterprise challenge is to enhance the flexibility needed for a successful economy and to tackle the regulatory concerns that all industrial economies face while securing the standards required in a successful society.
	Productivity growth, alongside high and stable levels of employment, is central to long-term economic performance and rising living standards. The UK has historically experienced low rates of productivity growth compared with other major economies. In recent years, however, the UK's relative performance has been improving. The UK now has output per worker similar to Germany, and has narrowed the gap with France. However, despite some progress, there remains a significant gap with the US. The Government's long-term goal is for the UK to continue to close the productivity gap by achieving a faster rate of growth than its main competitors.
	Enterprise is a critical ingredient of a flexible, modern economy. A thriving small and medium-sized business sector is important in driving productivity growth and generating new prosperity in disadvantaged areas. The creation and growth of new firms promotes the exploitation of new ideas and opportunities, and sharpens competition.
	The Government's strategy for closing the productivity gap in this environment has two broad strands: maintaining macro-economic stability to help businesses and individuals to plan for the future; and implementing micro-economic reforms to remove the barriers that prevent markets from functioning efficiently and flexibly. Effective and well focused regulation can play a vital role in correcting market failures, promoting fairness and competition, and driving up standards. However, inefficient regulation can impose a significant burden on business.
	The company law reform Bill will simplify our company law framework and bring it up to date with today's business needs. Modernising company law is key to promoting enterprise and growth. This Bill will enable more flexibility for companies and more effective shareholder engagement. It will bring deregulatory benefits of some £250 million a year, including £100 million for small companies. It will also build on what the Government have already done to improve our framework for business, including raising audit thresholds, improving the transparency of executive remuneration, and increasing investor confidence in company reporting and enforcement. This Bill is the next step in our ongoing programme to create the best climate for business success.
	Sitting alongside the Government's economic objective is the Government's aim to promote a fair and inclusive society where everyone shares in rising national prosperity and no one is held back from achieving his or her potential through disadvantage or lack of opportunity. The Government's reforms of the welfare state reflect their aims of eradicating child poverty, supporting families to balance their work and family life, promoting saving and ensuring security for all in old age.
	As the first milestone towards meeting their long-term goal of eradicating child poverty by 2020, the Government are on track to reduce the number of children in relative low-income households by a quarter between 1998–99 and 2004–05. The most recent data show that by 2002–03, the numbers of children in relative low-income households had fallen by 0.5 million before housing costs and by 0.6 million after housing costs, from 3.1 million and 4.2 million respectively.
	A fair society ensures that all pensioners can share in rising national prosperity. In 1997 the poorest pensioners received just £69 a week. By 2007 that will be £119 a week. In total the pension credit, which is rising in line with earnings, will benefit a total of 3.2 million pensioner households and, in all, 3.7 million pensioners.
	The Government are also committed to promoting fairness across the regions through overcoming regional disparities in economic performance. The Government's long-term regional economic aim is to make sustainable improvements in the economic performance of all English regions, while reducing the gap in growth rates between the regions. The Government believe that the best way to do this is to allow each region the freedom, flexibility and funding to tackle their own challenges, to exploit indigenous sources of growth and to meet their own priorities.
	Another way in which the Government have demonstrated their commitment to fairness is through the national minimum wage. So the Government are committed to promoting fairness alongside flexibility and enterprise to ensure that everyone can take advantage of opportunities to fulfil their potential. With this in mind, the DTI will be introducing a number of programme Bills aimed at entrenching fairness for all.
	The work and families Bill will give families more choice in balancing work and caring responsibilities, and in doing so help businesses to retain and recruit the very best people, by alleviating barriers to work. With unemployment at record lows, there is a real need to ensure that we use the talents of everyone. Many businesses already recognise the benefits of policies that offer more flexibility to their employees who in turn respond positively to the opportunities to manage home and work responsibilities better.
	We have a diverse population with diverse needs and diverse working patterns. Only by recognising and catering for that diversity will we enable people to contribute their full potential to wealth creation and take on the challenges of the 21st century global economy.
	The hugely successful right to request flexible working shows the way forward. It was developed in close consultation with business, and proceeds in a light-touch way. In the first year after introduction, we saw 800,000 new flexible working arrangements. This Bill, if this is what we decide as a result of the DTI consultation, can be used to extend the successful right to request flexible working to other people with caring responsibilities. Through our commitment to extend maternity and adoption pay and to enable mothers to transfer some of their leave and pay to fathers, we will help to fulfil our commitment to give children the best start in life and to give more choice to families about balancing work and caring responsibilities. But these measures also have to work for business.
	As part of our consultation we are looking closely at how we can make the legislation and the administration work better for employers. We have put forward specific proposals—for instance, to require longer notice periods if mothers change their return dates from maternity leave and to improve communication during leave to the benefit of employers and employees.
	I shall now turn to the Equality Bill, which is a major plank in the Government's strategy to ensure that discrimination and prejudice have no place in our society. But equality is not just a basic moral principle; it is also an economic imperative.
	Britain's businesses need to draw on the talents of the whole workforce if we are to remain successful. Yet unacceptable inequalities in opportunity remain. Too many people still face discrimination and prejudice. So we must equip Britain to tackle the root causes of discrimination and to promote human rights in the 21st century.
	The Equality Bill will establish a single Commission for Equality and Human Rights. This will be a radical and powerful new body, promoting equality and, for the first time, human rights as keystones of an inclusive and prosperous society, bringing together the work of the Commission for Racial Equality, the Equal Opportunities Commission and the Disability Rights Commission. It will provide institutional support for religion and belief, sexual orientation and age as well as human rights.
	For 30 years the consumer credit market has helped to build today's thriving economy. It has enabled our consumers to achieve the high standards of living they now experience and ensured that our businesses can flourish as the world-class institutions that serve us every day. The UK has one of the strongest and most efficient credit markets in the world. We now represent a quarter of the EU credit market generally and half of the EU credit card market. But the market has become increasingly dangerous for consumers. Unscrupulous lenders can destroy lives, coercing borrowers into credit agreements they either do not need or do not understand.
	More than half of households which are over-indebted have incomes of less than £7,500 per year. So we will bring about a full-scale reform of consumer credit legislation and create a fair, clear and competitive consumer credit market fit for the 21st century. The Consumer Credit Bill will update consumer credit law to provide greater protection from unfair lending practices and create a fairer and more competitive credit market.
	The land transactions Bill is also aimed at improving consumer protection and will extend FSA regulation to cover home reversion plans and Ijara (Sharia compliant) home finance arrangements, bringing benefit to vulnerable and minority sections of the population. The Bill will extend valuable consumer protections to elderly consumers when making one of the most important financial decisions they are likely to take. It will ensure that consumers of Sharia-compliant home finance arrangements also benefit from the protection of FSA regulation. Regulation should help improve consumer confidence in these products and so facilitate future market growth.
	We must not be complacent, but the UK remains strongly placed to see the economic imperatives of the global age fully met. The programme we have outlined addresses some key challenges we face and I commend it to the House.

Baroness Noakes: My Lords, I start by welcoming the noble Lord, Lord McKenzie of Luton, to the Dispatch Box as a Minister. He has been a regular contributor from the Back Benches to debates on economic affairs since he joined your Lordships' House last year, and so his promotion came as no surprise to those of us on these Benches. I also welcome the noble Lord as a fellow chartered accountant. Perhaps the noble Lord and I might swap notes on how our atypical roles as chartered accountants fit within our institute's requirements for continuous professional development.
	While I warmly welcome the noble Lord in his new role, I hope that he will not be disappointed if I cannot find quite the same degree of warmth for his speech. The noble Lord, Lord McIntosh of Haringey, who I am pleased to see in his place, in his final appearance at the Dispatch Box in the previous Parliament referred to the recital of the Government's view of their economic management as "the gloat". I can see that the Minister intends to take up where the noble Lord left off. Let me just say that a proper historic understanding of the Government's economic record starts in the early 1990s. My party bequeathed a golden legacy in the economy, without which the Government's bragging would look rather thin.
	The topics for today's debate are very wide, covering all industry and economic affairs. For these Benches I shall be dealing with the Treasury end of the spectrum and with pensions, while my noble friend Lady Miller will be dealing with the industry end of the spectrum when she winds up.
	The gracious Speech promised relatively little legislation in the Treasury arena. We welcome the announcement that there will be a Bill to bring home reversion plans within the auspices of the Financial Services Authority: we have long argued that to regulate equity release schemes but not home reversion plans was untenable.
	The gracious Speech made no mention of a further Finance Bill. I hope that the Minister will say something about what the Government intend. The Minister will be aware that some aspects of the first Finance Bill—broadly those which had had no consultation or scrutiny—were dropped when the election was called. Will there be a Finance (No. 3) Bill?
	As noble Lords are well aware, this House has a very limited role in relation to the Finance Bill, but a sub-committee of our committee on economic and financial affairs has, for the past two years, done sterling work scrutinising key parts of the Finance Bill. I very much hope that it will be able to continue its involvement this year because certain of the anti-avoidance provisions of the Finance Bill which were dropped last month are in need of rigorous scrutiny.
	I deplore tax evasion and it is right that our laws should not enable tax avoidance. But businesses need certainty and fairness in the corporate tax system, and some of the rhetoric that has recently been deployed, including by officers of what is now Her Majesty's Revenue and Customs, has overtones of a crusade against any form of tax planning. I have heard senior members of the multinational business community start to question the balance of advantage in remaining UK domiciled.
	Last night the president of the CBI sent a strong message to the Chancellor about the need to avoid increasing the tax burden on British business. The competitiveness of the UK has been seriously eroded in the past eight years. One element of that is tax, and many countries are now pushing their corporate tax rates below ours.
	The gracious Speech contained nothing to reassure the business community on taxation. I sincerely hope that we are not about to embark on a period where UK-based multinationals are driven away by tax rates or the general climate. I hope that the Minister will say something about the Government's general approach to corporate tax. The business community needs a clear message, and it did not get it last night when the Chancellor responded at the CBI dinner.
	There are many issues on the economic agenda. It is difficult to know where to begin; but it is difficult to avoid dealing with the Government's tax and spend policies. I start with spending. We know that the Government have spent a lot since 1997 and plan to continue to spend ahead of GDP growth. The key question is whether the Government are capable of getting value for money when they spend. Despite all the money that has been spent in the past eight years, in particular on health and education, we know that the outcomes have been unimpressive. The Office for National Statistics, even after changing the definitions, concluded that the public sector went backwards in efficiency terms over the past six years.
	The Government like to pretend that this issue is overshadowed by quality gains, but the truth is that one in three children leave primary school unable to write properly and that a teacher is attacked every seven minutes. The truth is that police are tied up in paperwork and that recorded violent crime rose by 83 per cent; and the truth is that the target culture destroys clinical priorities in the NHS and that more people die of hospital-acquired infections than on our roads.
	The Government are trying to improve the efficiency of government spending with Sir Peter Gershon's plans. We are not alone in having considerable scepticism about that. We can see no evidence of reduction in Civil Service numbers—quite the reverse. At the end of the day, streamlining the back office and smarter procurement, which is the Gershon prescription, is no substitute for reforming the way in which public services are delivered. The Government have failed on that. They show no signs yet of knowing how to translate public service spending into value-for-money spending. Because of that failure, the planned spending must translate into higher taxes. The Government freely admit that. Their own Budget report shows that tax as a percentage of GDP will rise by 2.2 percentage points to 38.5 per cent during the next five years.
	More importantly, all major commentators, as well as those of us on these Benches, believe that the Chancellor has got his sums wrong and that further taxes are on the cards in the next economic cycle. We have repeatedly asked the Government which taxes they will raise. It is highly significant that during the general election campaign, neither the Chancellor nor the Prime Minister would rule out national insurance rises.
	Since the Budget Statement in March, the economic news has been going one way. The Chancellor's Budget calculations are underpinned by growth assumptions of 3 per cent to 3.5 per cent this year, but most forecasts are about 2.5 per cent. The Chancellor stopped the Comptroller and Auditor-General auditing the GDP trend growth figures this year, so that he did not have to listen to the NAO's views, but I hope that he has been watching how consumer confidence has been evaporating in the high street and how consumer debt is now resulting in increased bankruptcies and mortgage repossessions. I hope that he also listened to the Governor of the Bank of England last week, when the Bank downgraded its forecast for 2005 to 2.5 per cent.
	The Chancellor has been accustomed to boast about his forecasting record, and the Minister repeated that boast today, but he may have to come to terms with the fact that he is not infallible. If the Minister thinks that the Chancellor is still right, as he seemed to suggest earlier, and if it is not unparliamentary, I propose a small wager to him on the outturn figures for growth this year.
	I predict that tax-and-spend will be a theme of this Parliament, but an even bigger theme will be pensions. We were pleased that the gracious Address said that the Government will,
	"begin long-term reform to provide sustainable income for those in retirement".
	At last, we have an acknowledgement from the Government that the current system is unsustainable. We have long argued that we have a real pensions crisis in this country, but the Government have been in denial. They have also been in denial about their share of the blame arising from the £5 billion a year advance corporation tax raid initiated in their first term. They have brushed off the falling savings ratio with nonsense about people being more secure and needing to save less.
	The Government's favoured solution of massive means testing through pension credit has failed in terms of uptake, as any solution that robs so many old people of their dignity deserves to fail. It has also failed to create the right incentives. The gracious Address made no mention of relevant legislation, and I hope that the Minister will confirm precisely what is intended. Will there be a draft pensions Bill, as has been suggested, and, if so, what will it cover and when will we see it? Also, will there be a judicial pensions Bill—again, not mentioned in the gracious Address? We are keen to ensure that judicial pensions can be brought within the new simplified system but, I hope, without any special privileges unavailable to ordinary hard-working people.
	We are committed to working with the Government on pensions reform. The Government's legacy will in practice ultimately depend on whether they solve the pensions crisis or carry on making it worse.
	I am sure that we will have a stimulating debate today. I am particularly looking forward to the contributions of my noble friends and to the winding-up speech of my noble friend Lady Miller. On behalf of these Benches, I promise the Government that their performance on economic and industry affairs will have our closest attention both today and for the rest of this Parliament.

The Lord Bishop of Worcester: My Lords, the gracious Speech begins with the economy and commits the Government,
	"to pursue economic policies which entrench stability and promote long-term growth and prosperity".
	It contains reference to low inflation and sound public finances. That the gracious Speech should begin with the economy should not surprise us, any more than we should be surprised that it is the management of the macro-economic scene to which the three speeches so far devoted their major attention.
	It is not surprising because, of course, for most people, as was clear during the recent election campaign, the capacity of the Government to manage the economy was one of the principal subjects of debate. At a certain point, I came to the conclusion that the subtext of the election campaign was that it was a principal responsibility of government to maintain a steady rise in the prices of people's houses and that that was their principal task. I find that somewhat depressing.
	But I want to speak about another economy. With the greatest of respect to the Minister, the noble Baroness, Lady Noakes, and the noble Lord, Lord Newby, for many people the conversation so far in this debate, and in much debate about government economic policy, is a somewhat private conversation, because the prosperity, stability and sound public finances about which we have been talking do not impact very much on their lives.
	Given that I recognised the voice on the telephone the other day, it was not a great surprise when my interlocutor said that he had spent all of his money on scratch cards and did not know what to do. It did not surprise me because that person has been there before and we have had the same telephone conversation before. It is easy to focus on such a person—his learning difficulties and his difficulties in the management of his life—and say that we have to run an economy that is not around the failings of those who cannot manage. But I am left with a question: does not the word "economy" come from a root meaning "household"? Are we not part of one household together? Do not those who buy scratch cards with impunity because they have enough money have any responsibility for those who buy them with disastrous effects? Do not those who draw profits from the sale of scratch cards also have some responsibility for those who suffer so much as a result? I mention that episode because it happened recently.
	However, I want to point to the area covered in the Minister's reference to the consumer credit Bill, in which I shall take considerable interest. We have a very interesting view of debt, what it is and what controlling it involves. We speak of debt as public debt and fiscal debt; we speak of debt, expecting the Government to bring it down; and we speak of debt when we consider those persons who are not managing it.
	The report from the commission chaired by the noble Lord, Lord Griffiths, on personal debt is an extremely important document which I hope will figure greatly in the discussions on the consumer credit Bill. It points to a thundercloud—the thunder we are not yet hearing, but we can see it on the horizon. In the report, the noble Lord and his colleagues point to the vulnerability not just of individuals, but also the vulnerability of the whole economy when it is based on debt as an assumption about the way to live.
	At the end of the discussions on how to control the instruments of consumer credit, perhaps we shall not be quite as sanguine as the Minister on having the best and most competitive consumer credit market in the world. We shall perhaps be a little more aware, because we need to be, that the setting of an example of indebtedness by those who can afford it is precisely what impacts so negatively on those who cannot and that the longstanding religious tradition that lies behind the prayers with which we begin is a tradition about the control of the activities of creditors whose uncontrolled activities are an extremely grave danger to the spiritual and moral well-being of a society.
	I am not suggesting that we can change that culture overnight. I am suggesting that yielding to it, expecting it to be our way of life into the future, is an extremely dangerous way to live. We are vulnerable as individuals, as we might be, for example, to a serious collapse in house prices; we are vulnerable as a nation and as an economy; and we are vulnerable as a world.
	The recent years in which campaigns have been waged quite rightly to write off the unrepayable debts of the poorest and most indebted countries must not allow us to imagine that the behaviour of those who can afford their debts has no part to play in solving the world's economic difficulties. As everyone knows, the most indebted country in the world is not the poorest, but the richest. That indebtedness has major long-term consequences for the lives of the rest of us.
	Furthermore, debt as an attitude and a way of life has the profoundest effect on our attitude towards the universe that we inhabit. It would appear that the way in which we live is revealed, for example, in climate change and the loss of species. Those kinds of signs show that we regard the universe as an essentially unsecured and never-to-be-repaid floating loan, on which we can draw in our generation at will and expect never to have to repay, hoping that for our children and grandchildren something will turn up.
	That is the way of debt. Planetary debt follows from national debt follows from personal debt. People who imagine that they are fine because they can afford it need to recognise the damage which follows that pattern of behaviour for those who are unable to afford it—that will appear when we discuss the consumer credit Bill no doubt—the damage it wreaks on the poorest nations and, ultimately, the damage on the resources of the planet that we all have to inhabit.
	I hope that when we come to discuss the economy, we shall have in our mind its root meaning of household, but also its deep connection with another word that is fashionable but tends to be discussed in a different compartment; namely, ecology. The ecology that we are creating when we allow credit to run out of control is an ecology in which some species will not survive and in which I shall continue to receive the kind of anguished phone call to which I referred earlier.

Baroness Thornton: My Lords, I start by welcoming my noble friend to his place as Minister on the Front Bench, and I trust that he will prosper there. A package of measures in the gracious Speech addresses the issue of building on the economic stability of the UK and creating more space and less regulation for innovators and entrepreneurs to thrive. Having spent the past four years running my own small business, I can testify to how welcome are the proposals in the Government's programme to simplify company law and exempt small and medium-sized firms from unnecessary law requirements. I also warmly welcome the introduction of measures to address equalities and the home life balance. I look forward to working with my noble friend on those matters.
	I intend to speak about the commitments the Government and, indeed, the other parties made during the course of the election in their manifestos and their programmes for business about the need to develop a more diverse business base in the UK by supporting the third sector and social enterprise.
	Before I do so, I should like to ask the Minister for specific assurances about the impact of the newly proposed companies Bill on the about-to-be-launched community interest company, which many noble Lords will recall we put through the House during the last Session, and the implications for industrial and provident societies and public interest companies. Some time has been spent in the past five years reforming the Victorian legislation that governs I&P societies, and we welcome the effort to mitigate some of the disadvantages that existed between them and companies in terms of cost, ease of formation, and lightness or complexity of regulation.
	I hope that the new proposals will enhance the choice of company form and not take us back to the uneven playing field that existed previously. I do not expect my noble friend to give me a detailed chapter and verse response at this stage, but I seek an undertaking that those who need to be consulted—the I&P societies, the co-operatives and social enterprises which may be affected—will be involved in discussions at an early stage because, apart from anything else, I would like to be here in a few months' time congratulating and supporting the Government during the course of the Bill, not declaring my intention to place amendments to it to remedy something that can be solved now.
	I need to declare an interest as someone who works as an adviser to the Co-operative Group and as the voluntary and unpaid chairman of the Social Enterprise Coalition, which acts as a voice for social enterprises in the UK. Many noble Lords will have received from the Social Enterprise Coalition in the period leading up to the election the manifesto for social enterprise called There's More to Business . . . , a copy of which I would be happy to make available to my noble friend in case he has misplaced his. Of course its recommendations are positive and realistic, the most important of which is recognising that social enterprise as a distinct way of doing business seeks to meet social and environmental needs rather than to maximise shareholder value.
	Examples of what are called for in the manifesto are: promoting a bigger and more strategic role for social enterprises in delivering public services; exploring social enterprise models particularly in the delivery of childcare, health services and social care; recognising and supporting the work of non-charitable social enterprises in delivering substantial public benefit; and supporting innovative approaches to securing wider social and environmental benefits through the procurement process and ensuring that they are reflected in procurement strategies and contract conditions.
	I am pleased to say that the manifesto received cross-party support. During the course of the election, all the three major parties gave support by visits to local social enterprises and including proposals about social enterprises in their policy programmes. The then co-chairman of the Conservative Party, Mr Liam Fox, said during a visit to a social enterprise in his constituency:
	"Social enterprise is an important model to add into the mix of businesses . . . it can not only fill a gap in the market, it can help to create a market that wasn't there before and clearly it's a model we want to encourage".
	The Conservative Party also pledged to recognise the value of social enterprise.
	The Liberal Democrat leading spokesperson, Simon Hughes, commented when visiting a social enterprise in his constituency that:
	"Social enterprises are shown to work and Liberal Democrats have in many places up and down Britain used them and worked with them and encouraged them from the vantage of being in charge of local authorities. That needs to be supported and replicated nationally and we have long taken the view that Government's job is to support, to encourage and to underpin social enterprise".
	While welcoming such support, it is in many ways what the Government said that we need to know most of all.
	Setting out the Government's policies to support business and enterprise, should they form the next government, the manifesto stated:
	"Enterprise is being strengthened in every sector and in every region, including new measures to promote the growth of social enterprises".
	Speaking during a visit to a Leicester-based social enterprise, Ground Control, the then Secretary of State for Trade and Industry, Patricia Hewitt, who launched the business manifesto, said:
	"Social enterprises are making a great difference to people all over the country and I'm proud that we have been able to make a difference in Government to the future of social enterprise. What we now have to do is carry that work forward if we were elected for a third term".
	We regard that as a bit of a hat-trick.
	In many ways I hope that, as we move forward with this Parliament and the Government unfold their programmes, we see the further growth of the third sector of the economy and within that support for the continued flourishing of social enterprise. The sector feels that commitments made in the recent general election give both a political commitment at the highest level in all the parties and provide a platform to hold the Government to account for the progress they need to make—and I say that in the nicest possible way.
	There is widespread agreement now about the value of social enterprise and its role in the growth of productivity and the diversity of service delivery. I look forward to working with my friends in government and in other parties to ensure that these aspirations become a reality.

Baroness O'Cathain: My Lords, the gracious Speech dealt with the economy in two sentences. That, I fear, is a fine example of arrogance and complacency:
	"My Government will continue to pursue economic policies which entrench stability and promote long-term growth and prosperity.
	To this end, my Government will continue to secure low inflation and sound public finances".—[Official Report, 17/5/05; col. 5.]
	In tabloid-speak I reckon that that means, "All is brilliant; we are brilliant; no worries", or at least on the economic front. I see that the Minister opposite is smiling. I hope that he continues to smile and I wish him well in his new position. I hope too that all his debates are as happy as this one is obviously turning out to be.
	I am afraid that I want to sound a warning note about arrogance and complacency. We must not be complacent, but some of the speeches so far in the debate have been pretty complacent. During the hyperbole of the general election, potential voters were told what the candidates thought they needed to know in order to be re-elected. As a result, the same old statistics were bandied about. That is not a political point, because every party does it. It is not even a UK point because, in every democracy, every party does it and gets away with it. However, I am aware of the constant manipulation of statistics.
	"Lies, damn lies and statistics",
	as Disraeli said so memorably. He is the same great Disraeli who transformed my party and made it national when he said that the Conservative Party is,
	"a national party or it is nothing".
	As an aside, I guess that he would be very pleased to hear that, in the nation of England—for we are a nation in terms of the rugby Six Nations Cup and so forth—the Conservatives won more votes in the recent general election than did the party of government.
	Economic statements leaning heavily on a selective recourse to statistics reflect a measure of arrogance. Who is truly fooled? The latest mantra being propagated by the Chancellor is a case in point. I say sorry to the Minister because he said precisely the same thing today when he claimed credit for 51 quarters of continuous growth. By my basic maths, 51 quarters is 12 ¾ years. As far as I recollect, the governing party has been in power for eight years. I know it seems like 12 ¾ years to me—and probably a lot more to some of my noble friends on these Benches—but we are not fooled.
	Bearing in mind the fact that some 17 million of the voting public stayed at home and that the Government achieved a 22 per cent endorsement from the voter population, there is no justification for any of us being complacent or arrogant or, indeed, for using the latest description from the government Benches of having achieved a hat-trick. Frankly, the general election turnout should be recognised as a humbling experience. As the right reverend Prelate mentioned, if more time in the past four years had been spent "on the ground" listening to the concerns, hopes and real-life experiences of the voter population, more people would have stirred themselves to vote.
	As an economist, I am the first person to admit that the subject of the economy is not exactly riveting. However, I am very concerned that some of the trends prevailing both in this country and internationally could have serious implications for the United Kingdom. The fine words of the gracious Speech promising to,
	"continue to secure low inflation and sound public finances",
	could well sound a little hollow in a couple of years' time, or even sooner.
	The latest inflation report from the Bank of England makes sombre reading for those who rely on domestic demand to fuel growth. The latest national accounts suggest that consumer spending growth slowed markedly in the last quarter of 2004 to only 0.2 per cent compared with 0.7 per cent in the previous quarter. The facts are that spending has decelerated in every quarter since the first quarter of 2004.
	In recent years, retail spending has made a substantial contribution to the overall growth in consumer spending. Even if you have no interest in economics, you must be aware that the retail scene is, as described recently by one major retailer,
	"a bloodbath out there".
	Margins are under huge pressure and costs seem to be accelerating. If those two trends continue, we know what the outcome will be in economic terms. It is a word of warning.
	The inflation report, being written by the Bank of England, is less dramatic in its use of language than was that person in the retail sector. Nevertheless, in its latest edition, the bank concedes that its regional agents point to,
	"lacklustre retail spending".
	The Bank of England attributes the deceleration in consumer spending to weak income growth, rises in interest rates and a slowdown in the housing market. To those three reasons I would add a sudden realisation of the huge growth in personal debt, an issue which has been mentioned already twice today. At the last estimate, British householders are £1 trillion in debt. I repeat: £1 trillion. In his opening speech, the Minister anticipated that someone would raise that issue, and someone is raising it. The Minister said that he was worried about debt but that it was "grounded on strong fundamentals". So that is all right then. I do not think so.
	The subject of personal debt does not feature large in our debates in this House nor, indeed, in Questions. Is that because we feel unable to come up with proposals to deal with the situation? Is it because we feel we do not have the right to encourage people to be less extravagant? Is it because we are not really concerned at the slick marketing of store cards and credit cards which catch the vulnerable? It is probably all of those.
	However—and this is a matter that I have raised before—I fear that a large proportion of our citizens are pretty well financially illiterate. The very surprising data unearthed by companies in the utilities sector are that the apparent or perceived affluence of individuals is in no way reliable evidence of their ability to pay.
	In my own circle of acquaintances I have looked on in horror when told of a credit card debt of many thousands of pounds which has been pretty much at that level for many years. Those interest payments, probably at a level of 20 per cent, are seriously impacting on both the stress level—that is, the health—and the living standards of that individual. I am referring to intelligent, educated, white collar, professional employees, not the kind of people we feel are most vulnerable to these situations. They seem to have grave difficulty in grasping what is at stake.
	Only last weekend, in the Times of Saturday, 14 May, I read about the charity Personal Finance Education Group, which promotes the teaching of finance in schools and provides resources for teachers. The chief executive of the charity is quoted as saying:
	"It is perfectly possible for someone to go through school without getting any personal finance education at all, which is horrendous when you think about the decisions they will have to take as school leavers".
	I know that personal finance is, theoretically, on the national curriculum, but it is competing for a place in the classroom against much more interesting subjects—at least in the view of the pupils.
	In the same article a lady is quoted as having arrived at university,
	"with the financial acumen of a 10 year-old".
	It is just a thought, but why not include financial literacy as part of the English curriculum? After all, we have got a thing or two to learn from Dickens and Micawber.
	We are all guilty of complacency on this issue. Are we going to do anything about it or are we still going to put it in the "all too difficult" basket? Is it that we have never really thought about the long-term impact of mounting personal indebtedness on the objective contained in the first sentence of the gracious Speech, namely:
	"My Government will continue to pursue economic policies which entrench stability and promote long-term growth and prosperity"?

Lord Redesdale: My Lords, this is my first debate handling the energy portfolio for these Benches. I succeed the noble Lord, Lord Ezra, whose knowledge of the subject is without comparison in this House. It looks as though the portfolio will be extremely interesting and of the greatest importance when one considers our ever increasing demands on energy resources and the impact this is having on climate change. The right reverend Prelate gave the House a timely reminder of the profligacy with which we are using our natural resources.
	As the Minister is aware, in the previous Session of Parliament I introduced the Renewable Energy Bill. Considering that energy was not mentioned in the gracious Speech, I feel that one or two Private Member's Bills may be in order. At this point I should declare a non-financial interest as a trustee of carbon neutral North East. I believe strongly that everyone—including Members of the House—could do immense amounts to save energy. I wonder how many noble Lords are sitting in the Chamber while their computers, printers and lights are on in their offices.
	The Government will need seriously to view their commitment to renewable energy. The growing animosity to wind turbines by a minority because of their visual impact on the landscape is short sighted when one considers the major impact on the landscape that climate change will wreak. However, as nuclear power is the issue in hand, I shall concentrate my comments in that area.
	Nuclear power is a contentious issue with strong and passionate opinions held on both sides of the debate. I hope that the wider national debate on this matter is reported accurately in the media. The Government seek to initiate this debate and I hope that it will be fruitful and result in some consensus.
	At this stage, my party is opposed to the nuclear option, for a number of reasons. The waste issue is yet to be resolved and the enormous costs that are being incurred and will be incurred to deal with our existing nuclear legacy are almost unquantifiable. Previously, those costs have proved so large that the nuclear industry has required significant financial subsidy from government on numerous occasions.
	We are all aware of the significant drawbacks to nuclear power. However, there is still a debate to be had over whether a new generation of nuclear power stations should be built. The conclusions of earlier debates on the issue were clear in that they resulted in a programme of decommissioning that will, at its current rate, result in nuclear power stations being phased out completely by 2023. It is to the reason for this apparent change that I now turn.
	This debate has returned due to the apparent emergence in the Government's consciousness of two issues relating to electricity generation—security of supply and carbon emissions. The need for a resolution to this pair of problems is not new, but so far there have been insufficiently vigorous attempts to solve both.
	The security of supply issue has arisen as a result of the Government's strategic energy sourcing decision to supplement and eventually replace in large part the North Sea reserves with gas imported from foreign nations. The much longer logistical chains that link these supplying nations to our own carry with them an increased risk of failure. This risk may reach unacceptable levels in some cases. Despite the assurances given to us all by the Minister, the noble Lord, Lord Sainsbury, that the dangers surrounding our gas supplies have been exaggerated, I would suggest that those risks are sufficiently great to form part of the reason for the return to the nuclear debate.
	Carbon emissions are perhaps the most significant reason for the debate's return. The process through which a nuclear power station generates electricity, as its proponents will tell you, does not generate carbon dioxide. On the other hand, the process of ignition through which our traditional—for example, gas and coal fired—power stations function does. This is, as I am sure all noble Lords are aware, significant from the perspective of tackling climate change, as it has been established that our carbon emissions are contributing greatly to this phenomenon.
	Climate change is not a new problem. Those working on tackling the problem were undoubtedly heartened in September of last year to hear the Prime Minister state that climate change was the world's greatest environmental challenge, with effects sufficiently far-reaching that they could alter human existence radically. Despite the Government's apparent awareness of the issue, their attempts to tackle it have been wholly insufficient. Not only will the Government, at their current rate of progress, fail to achieve the 20 per cent target reduction on 1990 levels of carbon emissions, but carbon dioxide emissions have risen under Labour. It would appear to be a case of the Government talking a good game in this area and not doing nearly enough in terms of concrete action.
	Carbon emissions can be reduced in two principal ways: first, by reducing the emissions that arise from generating a given volume of electricity and, secondly, by reducing the amount of electricity that has to be generated in the first place. Nuclear energy is being touted in some parts as a solution to the problem of carbon emissions. That represents a somewhat lop-sided approach to tackling the problem. As the Royal Society has pointed out, the problem of climate change is now so severe that tough political choices will need to be made. In addition to reducing emissions through changing methods of generation, it will be necessary to tackle the apparently insatiable desire for energy that the UK now exhibits.
	Energy efficiency is a much-touted but little-practised part of the fight against climate change. Despite the lip service that it has frequently been paid in government speeches, the overall energy consumption of the United Kingdom has increased by 7 per cent since the Government first came to power. It is that failure sufficiently to develop and exploit other means of lowering our carbon emissions that has led to the situation where the position is sufficiently serious that we should consider returning to growth in our nuclear generation capacity. It is my hope that during the nation's forthcoming discussion of whether to reverse our policy of reducing the proportion of our electricity generated by nuclear energy we do not forget that it is not the only means of reducing our carbon emissions.
	I should also point out that nuclear power will not be the wholly painless and easy route to achieving our goals of reduced emissions and secure supply that some would perhaps like it to be. Building a new generation of nuclear power stations will be a potentially difficult undertaking. Owing to our earlier policy of running down our nuclear industry we are facing a skills shortage in this area. Whether we still possess as a nation sufficient knowledge to build this new generation of power stations ourselves is a point of contention. Indeed, it is possible that, as the noble Lord, Lord Oxburgh, pointed out, we may no longer be capable even of being an intelligent customer for other people's technology—a fear echoed by the executive director of the UK Energy Research Centre, John Loughhead.
	In addition, as has been pointed out in this House previously, the public's fears about the safety of nuclear power stations will need to be addressed. Occurrences such as the recent leak at the Thorp reprocessing plant, make that task an uphill battle.
	The state is likely to have to bear the large cost of building a new generation of nuclear power stations. This is not surprising, given the previous failures of such projects to be completed within budget and on time. Given that previous ventures have failed to make a profit and significant government subsidies have been required to bail out the companies involved, the position is even more serious.
	Regardless of the final outcome of the nuclear debate, it will be necessary to find solutions to the existing waste problems. We await with interest the findings of the Committee on Radioactive Waste Management that should appear next year. Its recommendations will, no doubt, have significant bearings on the outcome of this debate, but it should not be underestimated, considering the size of the present waste mountain that we must dispose of.
	Building this new generation of nuclear power stations in this context will be a huge challenge and should not be undertaken lightly. What appears on the surface to be the easiest option should not be adopted at the expense of other measures, such as building sustainable renewable energy sources throughout the country—starting within the home. Over the next 20 or 30 years, that could make the nuclear option redundant.

Lord Haskel: My Lords, I am delighted to be speaking at the start of this third term Labour Government—an achievement for which for many of us have worked, of which many of us have dreamt and which many of us thought would never happen. Congratulations to Labour on this achievement.
	I congratulate my noble friend Lord McKenzie on his debut at the Dispatch Box. I am sure that he will be an important and effective member of the Government and I wish him every success. I also congratulate my noble friend Lord Sainsbury on his reappointment. Over the years, he has demonstrated the importance of continuity and it is about continuity that I wish to speak.
	Like other noble Lords, I particularly welcome in the gracious Speech the promise of continuing the prudent and careful management of our economy. As my noble friend Lord McKenzie reminded us, the stability created through these policies enables us to build a business strategy for the future. In our previous two terms, we started to put that strategy in place—a strategy of encouraging enterprise, innovation and technology to enable us to compete in a world of expanding high technology; a strategy much identified with my noble friend Lord Sainsbury. We have started to make the necessary investment in our science base. We are improving our skills. We are encouraging innovation and enterprise in academia and business. We are speeding up the flow of information between them.
	There are tax incentives. As my noble friend Lord McKenzie told us, we have opened up our markets to new ideas and businesses and made it easier for them to flourish. Through competition, we have encouraged a willingness to modernise and adapt. My wish is that we use this third period of government to continue with this strategy and establish it as a permanent fixture in our economy so that, to coin a phrase, there is no turning back.
	What stands in our way of achieving this? What stops it becoming part of the progressive consensus? I would like to point out three hazards, all of our own making. None of them is new, but all of them have subtly changed and are all the more dangerous because of that. The first hazard is society itself—the attitude of society towards technology and technological progress. This was first brought your Lordships' attention five years ago when the Science and Technology Select Committee produced a paper called Science and Society. I had the honour of being a member of the committee that wrote that paper and in it we drew your Lordships' attention to a paradox. On the one hand society was happy to enjoy the benefits of new technology but, on the other hand, society was deeply suspicious of it and of its risk. We proposed that instead of science trying to make society understand science, science should also try to understand the fears and concerns of society and discuss them openly.
	The reaction was instantaneous and extraordinary and we were all surprised by it. The Royal Society, the Royal Institution of Great Britain, the British Association for the Advancement of Science, the RSA and many others set about engaging the public in science. University chairs were established to study the subject and business and academia were anxious to learn best practice. In his excellent Reith lectures last month, the noble Lord, Lord Broers, spoke about the need for this in order to ensure the triumph of technology, as he put it. But how effective has all this activity been? There has certainly been a lot of talking about new technologies related to global warming, nuclear power and health, but how effective has that talking been in winning the acceptance of new technologies? I think it has been disappointing. Indeed, it may have created confusion.
	Nobody has been more diligent in engaging the public than the Food Standards Agency, yet a recent survey indicated that most adults did not know which foods were healthy because of the confusion over the wealth of information. My concern is that the dialogue has become the purpose. The real purpose is to win the hearts and minds of society. Talking may make people feel good, but if we do not move the dialogue on to positive, consistent targeting of people to persuade them to accept technological change I fear that a reluctant and sceptical society will stand in the way of our industrial strategy.
	The second hindrance to our strategy is regulation. As I said, none of these hazards is new. Like the noble Lord, Lord Newby, I am delighted that there is to be a Bill further to cut regulation inside and outside government by targeting costs. Last night the Chancellor promised us further reforms, and in his speech today my noble friend Lord McKenzie spoke about other reforms. All that continues a very welcome trend. In our two previous parliaments, we made a big effort to remove prescriptive regulations, we stopped telling firms how to run their businesses, we considerably simplified VAT for small and medium-sized enterprises and we moved to reduce the role of business as a tax collector. In fact, we have become the least regulated business environment in the OECD. But nobody believes that, and grumbling about regulation has increased—we have had it today.
	During the election campaign, small business owners complained to me about red tape, in a way that convinced me that complaining about regulation has become a kind of mantra or fixation. People complain about it, irrespective of its content. Because of that subtle change in thinking on the matter, it has also become an excuse for avoiding or postponing some of the difficult decisions in business relating to change and technology. For example, I believe that the pharmaceutical companies have used it as such.
	I believe that we have to respond to the situation, not only by action to reduce regulation but by being more robust in putting the other side of the argument. When I was in business, I used to think that what was good for business was good for the economy, so less regulation was good—but that is a narrow point of view. As the right reverend Prelates the Bishop of Worcester and the Bishop of Liverpool told us, the citizen has an interest in the economy too. So the quest is to find the right balance between market efficiency and the public interest. Few will argue with that, as business is making a real effort to become, and to be seen to become, more ethical and responsible.
	Instead of just apologising for and regretting regulation and doing all we can to cut it, we must also justify it; instead of apologising we must argue that it is the task of the Government to use regulation to promote competition, to deal with conflicts of interest, and to provide a level playing field and predictability, all in the interests of the fair society which my noble friend Lord McKenzie described in his opening speech. That is all in the interests of the citizen; it is a matter of matching "rights and responsibilities", to quote from the gracious Speech. If that is not done, the issue of regulation will be used to divert us from our strategy.
	In passing, I appeal to my noble friend to stop including some bus timetabling and digging holes in the road in regulations. All that does is to help our critics to bump up the numbers.
	My third concern is that we are not addressing our policy of innovation through science and technology to all sectors of business. While great effort has gone into persuading manufacturing and academia of the advantages of the strategy and the support provided by government, little effort has been made in persuading the financial or general services sectors of that. Yet these are some of the highest value-added parts of our economy; they spend a lot of money on acquiring knowledge and using it to develop businesses, on innovation and acquiring new skills. Yet the business strategy hardly addresses them.
	Perhaps that is because we still think of the economy in old-fashioned terms, but the services sector also benefits from the skills training, the technology strategy funds, the business support programmes, from the university challenge enterprise—even from the UK's stem cell initiative, the large facilities fund and many others. These schemes reduce their risk, which otherwise they would have to bear. They benefit from the faster commercialisation of innovation; in fact, the schemes mean more opportunities of commercialisation for them. There are some 25,000 students taking courses dealing with enterprise, and many of them are going to need the services sector.
	In order to address those sectors, we need to redefine what is meant by research and innovation in terms that mean a lot more to them and which they find attractive. Unless we do that, we shall limit the benefits of our strategy to those sectors and omit the important sectors that remain outside its scope. I understand that the Council for Science and Technology shares my concern and intends to develop some proposals for policy and action. I congratulate it on that.
	We are not the only country looking to this strategy to compete in world markets; there are others in Europe, Asia and North and South America, so it is important that we identify and deal with all the hazards that could impede the strategy, to ensure its maximum impact. I have outlined three: the need to win hearts and minds as well as talking the talk; the need to justify regulation as well as reduce it; and the need to embrace the services sector as well as manufacturing. All those are matters under our control. I hope that my noble friend can tell me that the Government recognise that and that they will take action.

Baroness Miller of Chilthorne Domer: My Lords, I am choosing to speak in today's debate on the gracious Speech because as Liberal Democrat spokesman on environmental and rural affairs I know that the effects of decisions made by the Department for Trade and Industry are as critical for rural areas, market towns and the environment as those made by Defra—and possibly more so. I will speak in particular about three areas; the draft marine Bill, energy issues and the role of the Office of Fair Trading. In those areas, the policies of the DTI are critical to the sustainability agenda; an agenda warmly laid out by the Prime Minister on various occasions, but whose realisation will come about only by a much bigger commitment from departments such as the DTI.
	That is highlighted especially by the anticipated draft marine Bill. Perhaps in reply, the Minister will tell me that my fears are groundless and I shall be most pleased. I am very pleased that the Government are finally bringing forward a draft of such a Bill. The marine environment is our most biodiverse environment and it offers wonderful leisure facilities such as beaches, surfing, sailing and recreational fishing. It is heavily used for freight transport. It is extremely important to major extractive industries—not only oil but also sand and gravel. It is now becoming a major player in the renewable energy field.
	At the moment, all those elements exist without any spatial planning framework. Decisions to grant a licence for one activity are made in isolation, not within an informed framework that recognises that there may be more or less appropriate places for such activity. In one way or another, the DTI is no doubt being heavily lobbied by interest groups to ensure, I fear, that the free-for-all nature of the present system might continue. However, the lack of a planning system also creates a lack of certainty, making investment harder to achieve, particularly for marine renewables which the Minister and I debated in this Chamber during the previous Session. I believe that it is imperative that the DTI supports Defra in bringing forward a Bill which includes a statutory framework for spatial planning in marine areas.
	In turning to the issue of energy, I warmly welcome my noble friend Lord Redesdale as our new spokesman on energy. He gave a balanced and wise speech, which I regret the noble Lord, Lord Marlesford, treated much too lightly in his rather derogatory reply. My noble friend Lord Redesdale gave a balanced and fair picture of the future, not the kind of one-sided view which the noble Lord, Lord Marlesford, always seems to put forward.
	During canvassing, I was struck by the fact that I saw an enormous number of houses built in the past five years but on only one in thousands did I see any sign of solar panels, photovoltaics or any other form of renewable energy. Why is this country not following the lead of other countries such as Spain where all new build must include such things?
	No doubt as we debate the future of energy, nuclear power will arise time and again in our debates, and rightly so. Even discounting the terrorist threat that nuclear power stations inevitably bring with them, which has been recognised by all parties, the devastation that an accident, although very unlikely, would bring to a small island such as Britain, and the lack of a solution to the waste problem, I do not believe that the economics yet favour a nuclear solution. But in the light of climate change, I am willing to debate the issue with an open mind and I believe that it would behove all parties in this House to do the same.
	We in this House, unlike investors, fortunately, do not spend nearly enough time discussing new technologies such as fuel cells. They would merit a debate in themselves and we have as yet talked little about them. But we have talked about community-based combined heat and power technologies and domestic scale microgeneration. I believe that these offer diversity and security of supply. As each house generates its own heat and electricity, there is no loss of power in transmission.
	Last week, many of us heard the excellent speech given by my noble friend Lord Ezra at the Most Worshipful Company of Fuellers. His long perspective on energy issues over many decades was especially interesting given the debates we will be having in this Parliament about future energy policy. History shows what a cold wind can blow over government by getting energy policy wrong. I hope that both this House and another place will devote the time necessary to getting the energy policy right and help the Government by reaching a consensus on a way forward.
	I want to mention the Office of Fair Trading and to take the House back to 2000. Then the Competition Commission inquired into the need for a supermarket code of conduct in the light of the effect on suppliers of the buying policy of a consolidated group of supermarkets. The inquiry concluded that this complex monopoly had about 30 practices which affected the competitiveness of some of their suppliers and distorted competition in the supply market. Well, it is now five years later, and unfortunately, although there is a code of practice, it does not seem to have been at all effective—I am aware of the recent review of its effectiveness.
	I give west country lamb as an example. I believe all Sainsbury's lamb was from the west country and there was a very fast switch from the one processor, which affected dozens and dozens of farmers throughout the area. Sainsbury's is by no means the only or worst offender in this respect. All the other supermarkets must bear much responsibility for the fact that they have not stood by the spirit of the code. Therefore, I believe that the time has come to have a fair trade inspector with real powers to enforce the code. These Benches have called for that time and again.
	Finally, I turn to the Competition's Commission's view of one supermarket chain, Tesco, having such a large share of the market with hypermarkets, supermarkets, metro stores and corner shops—call them what you like. I ask the Minister to say when ownership by one chain of so many retail outlets becomes unacceptable.
	That begs fundamental questions about regulation, which seems to be all or nothing. In some areas, regulation by this Government and previous governments has been gold-plated and extremely heavy-handed. The Government bring quite simple directives from Brussels into disrepute by such gold-plating. But in the case that I have just mentioned, regulation seems to be non-existent, and I believe that striking a balance would serve the future of rural areas, in particular, very well.

Lord Bhattacharyya: My Lords, I am pleased to be able to contribute to the debate on Her Majesty's most gracious Speech, particularly following the safe return of the Labour Party to government with a very comfortable majority. I also congratulate my noble friend Lord McKenzie of Luton on being promoted to the Front Bench. He is a charming person and a true professional, and I am sure that he will perform very well.
	The structural reforms introduced by successive governments over the past 20 years have paid huge dividends. External conditions have been benign. Even so, the monetary and fiscal frameworks that Labour has built in government are impressive. Wherever I travel in the world—in developing or developed nations—the UK economy is the envy of everyone I meet. How refreshing; what a change over the past few years. For the Treasury to get praise from the IMF is a wonderful turnaround. This year it said that the UK's fiscal and monetary policy frameworks remain at the forefront of international best practice.
	However, today we are living in a world of continuous improvement. We can always do better. So, after the election it is right to take stock and to consider how we can continue that improvement. The Chancellor's iron grip on fiscal and monetary policy has brought greater stability, which is of vital importance when making investment decisions, especially in the sector with which I identify—manufacturing. At around 2.5 per cent per annum, GDP growth is close to the historical long-term trend. Of course, what is important is stability.
	If we are to increase that trend rate of growth, we have to tackle the productivity gap which still exists between us and our major international competitors. Although measuring productivity is fraught with difficulties—I do not believe in the majority of the statistics about our productivity—there is a consensus that the UK has between 10 and 25 per cent lower output per worker than France, Germany and the USA.
	In my own sector of manufacturing, we have had some huge increases in productivity—a 30 per cent increase between 1993 and 2003—but the relative gap still exists. Sustainable improvements in productivity are a complex function of the effective utilisation of investment. That, in turn, is a function of market size, skills, technology and the ability to design desirable products and services. Such improvements are also a function of the fiscal and regulatory environment in which the investment takes place.
	Lower levels of investment and poorer skill levels account for much of the difference with our continental neighbours. The UK still has a significant deficit in intermediate skills compared with France and Germany. Although things are improving, there is no doubt that the effective utilisation of investment can be adversely affected by the lack of skills.
	However, around the world major changes in productivity have come from technical change. I am delighted that the long-term decline in R&D as a proportion of national income has been arrested. There has been a rise in business R&D since 1997. Although it is too early to tell, the introduction of tax credits for R&D may make a further contribution to this process.
	There has been a great deal of effort in innovation. That has been underpinned by investment in a strong university science, engineering and technology base. The present Government have made a huge commitment to science, and the funds of the research councils will rise from £1.3 billion in 1997 to more than £3.4 billion a year by 2008. Furthermore, the connection between science spending and business has improved enormously. By any measure, there is a huge increase in science spending. However, science spending should not become like apple pie and motherhood—a universal good thing. It is not an end in itself.
	As an engineer, I am sometimes puzzled when I hear politicians talk about science and wealth creation. Somehow, engineering and technology disappear from the vocabulary. We should talk of science, engineering and technology together because science alone does not create wealth.
	The increase in spending means that today the UK is the most prolific of all the OECD countries in terms of papers and citations per capita—a wonderful achievement. But, as well as papers, we need to produce new sustainable industries and improve the quality of life. We are going a long way towards achieving that. I think that a great deal of credit for the increase in spending should go to the science Minister, my noble friend Lord Sainsbury, for his passion and commitment to science and innovation. For the first time, wherever I go, people talk about a science Minister being able to enthuse not just our people but governments all over the world in relation to spending on science and technology.
	There are 300,000 more businesses today than there were in 1997. If we want them to grow and prosper, we must simplify the bureaucracy with which they have to deal. It is not just a question of regulation but of simplifying the bureaucracy. For small firms, compliance with regulations is a huge task. I am not someone who thinks that all regulations are somehow bad. Quite the opposite—good regulations are essential to the functioning of business and quality of life. You have only to go to some third world countries to realise what happens if you do not have good regulation. However, over-complex regulation is creating many jobs for consultants and accountants in helping firms simply to comply with the regulations. Unfortunately, those jobs add nothing to wealth creation.
	Noble Lords may have noticed that the public sector has been in the news lately. It is this sector that we are told has a productivity problem. Successive governments have failed to set a clear policy agenda for the public services. The indecision over in which sector—public or private—some services should sit has led to chronic underinvestment and low productivity. This underinvestment is at last being addressed.
	Personally, I wish that the reform process had begun earlier. But reform in public services is always difficult and productivity improvements take time. Hence, the arguments in the general election about rapid increases in public sector productivity were completely unrealistic. Within the public services there is a great deal of learning to be done. What do we expect them to do in the 21st century and how are those services to be delivered? I refer to implementation. That is where we have had some problems, and we are likely to have some in the future as well.
	Improving performance in the public services—particularly in health—requires some new thinking. However, even within a short period, the improvements in productivity that we have seen in health are remarkable. It takes a long time to get nurses, doctors, the capital and the training that takes place in the health service. Looking at the improvements in productivity within the past few years, many of our competitors would say that we have achieved a near miracle when it comes to the health service.
	Of course, there are problems. As such, healthcare is a very complicated system. It is an ensemble of integrated stochastic systems and without clear identification and characterisation of those systems the optimisation of resources is just not possible. Every hospital is different; every town has a different fingerprint and it is difficult to identify those differences quickly. It may take five to 10 years before we see a true increase in the levels of productivity under the current spending.
	That is very similar to manufacturing. There is not much difference between the analysis of the healthcare system and what has happened in manufacturing systems. Looking at the world itself, the change in the productivity of manufacturing has taken place with a lot of understanding and analysis. Much has now been understood about that and there is a transfer of that understanding to the health service. Simple process analysis leads to contradictory target setting, poor allocation of resources and disillusioned staff.
	Recently, newspapers have been full of articles about the role of consultants in the economy—much of it far from complimentary. That raised a smile and a feeling of déjà vu in my office. I have spent the past 30 years working around the world turning around many large-scale manufacturing enterprises. I have gone in after the consultants, which can be like calling in the plumber after a botched attempt by a home owner to get a new central heating system fitted by a bloke named Dave. I have witnessed too often the dire consequences of consultant-led unsustainable short-term restructuring. Far too many of our larger businesses have simply been restructured out of existence.
	Let me remind noble Lords where this process began. In the 1980s, the problem of low productivity in the state-owned enterprises came to a head. The reasons were many and various. The organisations had been run as part of the state and in a culture that existed before the days of a mass higher education system, employees were not trained to make decisions. By and large, there was not the skill-base and they were ill-equipped scientifically and technologically to succeed in the modern world, other than in exceptional cases. Poor management became the shorthand diagnosis.
	It is easy to see, therefore, why the shorthand prescription was far more management education. There is nothing wrong with that in principle. Of course, it is important for scientists, engineers and technologists to have an understanding of business, which is taking place in our schools and universities, but we should not place a greater emphasis on management than it is able to support.
	The skills necessary for turning round our industries, especially the private sector, are here, but we must move away from the infatuation with MBA talk and the latest management fad. I shall give the House some statistics. This year, in this country, we shall produce 33,000 MBAs. That figure comes from the Higher Education Statistics Agency. That is almost 6,000 more than all the physical sciences, mathematical sciences, computer sciences, engineering, technology, architecture and building masters level students added together. How on earth do we become a technological nation? How on earth will we be able to exploit the science and technology on which we are spending huge sums of money?
	One can see what happens. There is a well-trodden formula: have an article published in the Harvard Business Review, pump it into a book, pray for a bestseller, and market the idea for all it is worth through a consulting company and gullible politicians will accept it.
	Most of the fad business consulting efforts fit that pattern. The best guru in this area is Tom Peters, who, in 1982, wrote a book, In Search of Excellence. It eulogised 43 firms from the Fortune 500, but not one of them is still in existence. In a recent interview reported in Business Week, he admitted that he had made up much of the detail on which the book was based.
	One has to understand that our competitors—Japan, Germany, France—will be completely taken aback when we say that management consultants have restructured our organisations and developed our strategy. So if one looks at the management consultants, the MBAs coming out of the country, we should have the best productivity figures in the world, but we do not. Politicians and business leaders should understand that.
	The latest buzz is about leadership. How many genuine leaders, in whatever field, do noble Lords know who have been on a leadership programme? Real leaders are born, not made.
	As my area is manufacturing, I must say something on it. Recent history in Britain is a tale of two phoenix: one the parent of MG Rover and the other a much healthier bird, the manufacturing sector itself which has demonstrated the true phoenix properties of self-renewal. Manufacturing has renewed itself in this country. Visiting Longbridge regularly from the early 1970s, I have gained an insight into the causes of its decline. In my experience, Longbridge never made any money. A cruel combination of political interference, inept management, lack of technical competence, insufficient capital, and a lack of understanding of the global industry dynamics all contributed to a failure to develop successful new products.
	Thankfully, MG Rover is not representative of the automotive industry or the wider manufacturing sector. Today we produce 1.6 million cars a year in this country, an increase of 750,000 units per year since 1982. Manufacturing today is a leading source of innovation, creating high value-added products and services with significant spill-over benefits into other sectors—an asset in its own right and an important catalyst for other high-skill, technology-based economic activities.
	Manufacturing still accounts for 80 per cent of UK business expenditure on R&D and two-thirds of our exports. Output has continued to rise over the long term and it is still worth around £155 billion per annum. So we cannot just ignore it.
	We cannot talk about manufacturing today without mentioning India and China. I visit those two countries every month. Those two great nations have a population of around 2.5 billion people, almost eight times the size of the enlarged European Union. Their economies are growing at the rate of 8 per cent a year. They produce as many graduates per year as the total working population of England, France and Germany. They invest heavily in their infrastructure. When one looks at the number of vehicles per head, one realises why manufacturers wish to locate in China. The USA has 80 cars for every 100 people, German has 50, but China has only 0.5, so the market is huge. That is the reason why most industrialists invest in China.
	One last point: I heard the noble Viscount, Lord Trenchard, talking about the reason why things happened between MG Rover and Shanghai, which was because they had to pay the pension fund. That is rubbish. Shanghai never intended to produce cars in the UK. Why would they? Therefore, if we want to do business with those countries, we need a much more sophisticated understanding of the Asian business culture. Take MG Rover, when some of the giants of the car industry struggled to create a future for Longbridge. Was it ever likely—to make the understatement of the year—that the Phoenix four could succeed and the Government started backing them?

Lord Selsdon: My Lords, I much enjoyed the rendering by the new economic choirmaster on the Front Benches opposite, the noble Lord, Lord McKenzie, of "For we are jolly good fellows". It was sung on a single note, but it was genuine, I appreciated it, and I did not disagree with much of what he said.
	However, I am a little concerned about how the Government change things around. This should be the defence and foreign affairs debate, on which I had intended to speak. Never mind.
	I was brought up in a now defunct business. I saw a little ticker tape the other day which said "Government abolishes trade". The next bit was missing. But since my life has been in trade and I have always been seated below the salt, I wondered whether it was necessary to trade any more. We are still perhaps the fifth greatest trading nation; we may have the fourth biggest economy; over 80 per cent of our imports and exports go by sea; but we do not make things any more and we believe in this lovely term "downsizing and outsourcing".
	I always wanted to be an engineer. I took over as chairman of the international side of the Engineering Industry Association from Sir Monty Finniston. He made a wonderful speech; he said that 50 per cent of all inventions in the world had been invented in the United Kingdom and only 10 per cent had been exploited. In what do we need to trade? It is no longer textiles or textile machinery or mining or mining machinery. In fact it does not really matter what we trade in as long as added value is created here at home. Where that added value comes is unimportant as long as there is a reasonable balance of payments, which there is.
	So what will be the powerhouse that drives the British economy in the next few years? As I look down from these great heights upon yesterday's men, thinking of yesterday but not yet worrying about tomorrow, I want to give them certain reassurances. In a way we are back in a form of Victorian England where wealth will drive infrastructure development and we will see the biggest recovery in our infrastructure in more than 200 years. But there is a worry. This is not, as government say, government spending, this is government commitment. Before I move on to the great and glorious future, I wish first to look at the three areas that are vital to our economy and to our people—health, education and transport.
	I start with health, at which I have been looking for some time. As old age approaches and your insurance policy costs get higher and higher, you start to wonder whether the facilities will be there to keep you alive when you decide you want to continue. So we look at our wonderful hospital building programme. It is strange that we are going to spend £16 billion on very much needed new hospitals, but to date the Government have spent only £300 million and are expecting the private sector in some way or another to pay the rest. I have to disclose an interest. I am the director of a construction company which has found that it is no longer economic to build hospitals, so we have had to pull out of building, as many building companies have. This does not mean that the hospitals cannot be built, but that there needs to be some new approach.
	One of my worries in relation to the spending programme is that the biggest growth area in this country has been the recruitment of people by the state. That does not necessarily matter if the economy can support it, but I want to draw a couple of comparisons.
	I was brought up, Florence Nightingale-style, to believe that we had the best health service in the world, and I genuinely believed that it should be a public service. Now, when I look at our industrial or economic competitors, I find that in the United Kingdom we are brilliant. We employ over 1 million people in the health service, who look after 200,000 beds, of which 40 per cent are occupied long-term by those with learning difficulties, mental problems, or the aged. Our competitors on the Continent—France and Germany—employ about the same number of people, who look after nearly 1 million beds. So we employ six to seven people for every bed and they employ between one and two. It does not mean that we should employ fewer people but that we should have the facilities for these people to be occupied more effectively.
	By the end of this year, in December—only five or six months away—it is said that 10 per cent of all operations will be handled by the private sector. The private sector does not have enough beds or the capacity for that. So we shall introduce a new arrangement—we will be exporting our people to the Continent of Europe for operations where waiting time may be a matter of only days or weeks. That is being done very effectively by Guy's and St Thomas', which are the lead commissioners of the NHS. There is nothing wrong in that.
	However, we have a problem with such things as education. As we know well, people who live in urban areas find it very difficult to get places for their children at a local school. There are plenty of stories about that and we all know how difficult it is, even with the new academies.
	One factor is our failure adequately to use modern technology. We have one of the worst transport systems in the world and the most expensive costs per kilometre for all forms of transport. Yet we have the potential with new technologies. Inevitably, as I often do in your Lordships' House, I have to go back to where it all began.
	I go to Ptolemy. Ptolemy said that the Earth was in the middle of an envelope and that beyond the envelope there was nothing. Aristotle also said something to the same effect. But then along came this great chap who was brought up in Krakow—where the former Pope came from—Copernicus. In 1530 Copernicus introduced a revolutionary theory called De Revolutionibus, which said that the Earth was not the centre of everything, but that it revolved around the Sun. He got into some trouble over that. A little while later Galileo agreed with Copernicus and got into trouble with the Church. The Inquisition was going to have him put down.
	In 1530 Galileo introduced a new theory of inertia which was later taken up by someone else. But in 1633 he was the first person ever to be interned in his home. The Church did not want to put him down so it adopted the same policy as the Labour Government has with doubtful criminals. His theory was then taken up by Newton, which was quite interesting as time went on. It was Newton's first law of motion.
	That theory moved on. The Minister knows exactly where I am going; I am going to his pet subject. It moved on to Einstein and his theory of relativity. Then we reach the wonderful system of space.
	Your Lordships will know that our scientists and technologists in this field are probably the best in the world. In this area of knowledge we can move on to great things. I remind your Lordships of the Cassini-Huygens probe that went to Saturn. Many of us are not sure where Saturn is, but we think that it is the one with the ring around it. The probe landed on Titan, which is, surprisingly enough, not far away from its own earth. On its front, it had a little probe the size of one's little finger. It took a quarter of a second to crash into the planet. The number of gigabytes of information that came back into the system in that quarter of a second has helped to make us the most advanced people in the robotics world.
	There is comfort for all those who believe that global warming will take place. I should declare that this is not based on personal knowledge. I am joint secretary of the Parliamentary Space Committee. Many of our members, of course, left in the last election. The Huygens project was fascinating. I was told that Titan is really the same as Earth. It has rivers, gulches, stones, rocks and dendrology which is all frozen. I was told, "So, Malcolm as the Earth warms up, Titan will also warm up and Titan will be an exact replica of Earth. We can assure you that our technology will be sufficient to transfer the entire population of Earth to Titan, where it will thrive". It should not take too long. That will possibly happen in about one and a quarter million years. But that is the sort of technology we have.
	Out of these developments from our space programme, jointly with others, comes Galileo, obviously named after the great man. Galileo is the new GPS system, which will be operational in 2008. It is a joint European venture. But it means that all sorts of new information will be available and new methods of location, which will help in health and safety. Every mobile telephone will be able immediately to transmit emergency signals. This could be a significant revenue earner. It relates, obviously, to navigation worldwide, even to farming in remote areas or the allocation of fertilizers to crops. The possibilities for development grow and grow.
	That is just one thought. The navigational system market will rise from about £13 billion to over £200 billion in the next 15 years. I want your Lordships to think back to mobile telephone licences the Government sold for £1 billion. I wish much of that money had been put back into science and technology, for our budget is far too small for a nation of our capability.
	I had rather hoped that the Minister would be sitting on these Benches—I still hope that he may with another hat on—but he deserves a lot of credit for what he did with very limited resources. He is highly respected throughout the industry. There were cries of "Thank goodness!" when he was reappointed and I hope that he will stay for a long time. At the end of this year, there is to be a space conference over here. Would he be willing to allow us to have a fairly extensive debate in this House on space, because it is an interesting subject?
	I leave your Lordships with two thoughts. The first concerns gravitational waves. I have been studying Einstein's theory of relativity, and I found that I could not really understand it until I went to the Internet to ask whether I could have a guide for 12 year-olds. Actually, there was only one for 14 year-olds. I then found that I could begin to understand it. We know that, in general, sound moves at the speed of sound but with electromagnetic communication the sound and everything else moves at the speed of light. You may see some broadcaster or a member of the Labour Party opening his mouth but the words come out later. That is the maximum speed of that communication, but most of the information that you get from space comes from light. Gravitational waves can provide additional sources of information that may be pretty helpful in the future.
	Scientists to whom I have talked explained to me that we are the most advanced in gravitational waves. A gravitational wave is like dropping a stone in a pond: the ripples get slower and slower as they reach the edge. Therefore, as from space the ripples come down here, they do not stop, they go round anything. I had thought that perhaps at some time gravitational waves might replace all communications frequencies and wavelengths, but I was told, "No, they make too much noise, although we cannot hear them". The United States want to, as I call it, power share with us. They have built an enormous tunnel to test gravitational waves and they want our technology. We should not give it to them except at a high price.
	I have so loved the advances in technology. I am pleased and proud that we are building helicopters for the United States President when we thought that our helicopter industry was dead. Our manufacturing sector must be technologically led.
	I end by returning to a religious statement—I hope that your Lordships will think about this because it caused me to think—
	"I am Alpha and Omega; the beginning and the ending".
	Does infinity come before alpha or after omega or between the two? Why is the symbol for alpha in the lateral plane half of the symbol for infinity and, in the vertical plane, half of the symbol for omega?

Lord Vallance of Tummel: My Lords, I suppose that someone had the unenviable task of coming back down to earth.
	The dog that did not bark during the recent election campaign was, of course, the European one. At least, if it did, it barked pianissimo. Perhaps that was understandable but, now that the election has come and gone and the next national electoral event may be the prospective referendum, we should do well to attend to the European dimension. It is particularly relevant for industry and economic affairs.
	So many issues of current concern to the business community lead back to Brussels or Strasbourg. There is a wide spectrum of potential opportunities and risks. At one end lie the positives, including a reinvigorated pursuit of the Lisbon goals, a successful Brussels-led conclusion to the current trade round and a services directive that genuinely opens up the bulk of the European internal market that remains closed. At the other end lie the negatives, including the potential loss of the UK rebate, loss of control over tax policy or loss of flexibility in our labour markets.
	It is hardly surprising that there is an equally wide spectrum of opinion among business people on whether the commercial benefits of the UK's full engagement in the European Union outweigh the attendant costs. Many, like myself, are convinced that they do. Many would prefer to be a good deal more detached. Many more are yet to be persuaded. One thing is sure: no one can now claim to speak for the whole of British business when it comes to matters European, least of all a former president of the Confederation of British Industry, such as me. There is just too much diversity of opinion.
	Paradoxically, I find from talking to business friends and colleagues across the rest of Europe that they have no such doubts about the value of the UK's full engagement. Indeed, we sometimes underestimate how much the business community in the rest of the EU looks to the UK to take the lead in encouraging an environment where business can prosper, bringing with it renewed economic growth at higher levels of employment.
	The Government have an uphill battle to fight for the next year or so to bring about a similar consistency of view among UK business people, but it is a battle that needs to be engaged because, although the business community has no vote, it influences public opinion. Indeed, in European affairs, it is difficult to imagine the electorate as a whole taking a positive view if business is consistently negative.
	It is not too difficult to persuade business people of the benefits of free and fair trade or of an open internal market within the EU; those are self-evident gains. Much more challenging is to allay the justifiable fear of over-regulation. EU regulation lies at the heart of business disquiet. It is compounded by the fact that UK governments have proved themselves no mean regulators on their own account.
	The prime ills of over-regulation are cultural. Regulation by definition means rules. Rules mean bureaucracy and risk-aversion—the antithesis of enterprise. Companies react to regulation by becoming bureaucratic themselves, as I know only too well, and they lose their cutting edge. That cultural cost is significant and often unrecognised.
	There is a systemic problem here. Ask a businessman to list the top three regulations that he would like withdrawn and, often, he will be at a loss for a reply. What he knows is that it is the cumulative effect of a multiplicity of regulations that is the main burden, rather than a few specific rules where the shoe pinches. The system is designed to make regulation far easier than deregulation and the only answer is to redesign that system to redress the balance.
	I listened attentively to what the Chancellor of the Exchequer had to say on the subject at last night's CBI dinner. Although it was good to hear a recognition of the problem and of the prospect of a Bill, I fear that the proposals that the Government advocate do not get down to the root causes of over-regulation. They fail to nip the problem in the bud.
	A risk-based approach to inspections, the merging of regulatory bodies and departmental objectives on red tape are all desirable, but there will be no lasting solution without the mandatory use of sunset clauses, rigorous economic regulatory impact assessments—hence the opportunity that the noble Lord, Lord Haskel, was seeking to justify regulation in the first place—and equally rigorous post-audits of whether the claimed benefits of a regulation are achieved in practice. There can be no reliance on a regulator's self-denying ordinance. Regulators themselves need to be open to proper independent scrutiny and properly accountable to an independent body.
	If the UK has a long way to go to achieve the right balance between market intervention, enterprise and economic growth, EU institutions have even further to go. If the UK does not show the way, it is hard to see how other like-minded countries will achieve the momentum to succeed.
	As luck would have it, the directorate in the European Commission that is the focus of the business community's greatest concern—the Directorate for Employment, Social Affairs and Equal Opportunities—is one of those that has furthest to go in instituting a sensible regime of regulatory restraint. It also exemplifies a common trait among regulators that the longer that survive after establishing sound principles, the more they get drawn into excessive detail in the application of those principles.
	The devil lies in that detail. In the European context, the danger lies in endemic breaches of the principle of subsidiarity, as regulation grinds ever smaller. The principles of equality of opportunity and sound employment practice are quite properly a matter for the EU. They are well established and understood. But the necessary fine-tuning of their practical application can be achieved only at national and local level.
	We can take the current controversy over the individual opt-out from the Working Time Directive. The only way of achieving an outcome that meets the needs of both business and individual employees is to take decisions voluntarily and locally. A uniform maximum 48-hour working week, imposed at European level, simply cannot achieve the same degree of fine tuning, by definition.
	There are at least two ways of dealing with such a problem, both of which would find a great deal of support in the business community throughout Europe, not just in the UK. The first is to ensure that regulatory bodies are not allowed to survive their usefulness. In fact, there is a lot to be said for giving all regulators a fixed term. The other way, which could have a wide application across EU directorates, would tackle the question of subsidiarity head-on. Each new piece of business regulation would be subject to a straightforward subsidiarity test. The test would be required to show for each new regulation that there were greater economic benefits to be derived from its application at European level rather than national level. If that could not be demonstrated, the presumption in favour of subsidiarity would apply. What could be more reasonable?
	My point is a simple one: sound and proportionate regulation is a prerequisite of our international competitiveness. One of the greatest hopes of the business community is that the UK will vigorously pursue systemic change in its approach to regulation with that in mind. One of the greatest fears of the business community is of over-regulation from Europe, whereby the principle of subsidiarity goes by the board. The hopes and fears can and must be fully addressed in the next Parliament; let us not lose the opportunity by being insufficiently radical.

Lord Harrison: My Lords, I too welcome my noble friend Lord McKenzie of Luton and wish him well in his career. I am also pleased to see the return of my noble friend Lord Sainsbury of Turville, whose impartiality has won him admiration from all parts of the House. I say to the noble Lord, Lord Selsdon, that my remarks will be confined to the more sub-lunar. I can, however, tell him that long stretches on the Benches in your Lordships' House during some of the longer debates that we have had have given me an intimate and perfect understanding of infinity.
	Apart from continuing to run a good economy, the Government must, during their EU presidency and in the run-up to the EU referendum, grab, tame and breathe renewed life into the EU's central project, the establishment of a single European market. All the separate tasks are intimately related. For years, the European Union has been admired for bringing peace and prosperity to war-torn Europe. More recently, its writ, markets and democracy have been carried into an enlarged European Union of 25. Now, we need the alchemy of a sound, deep and fully functioning market to give Europe's citizens the tangible benefits of jobs and prosperity. Solve the markets, and you solve the problem of Euro-scepticism.
	Curiously, the British "No" campaign, launched today, also vaunts the virtues of a common market. That, they say, is all that they want. But here's the rub: the golden rule of markets is that you need a market place, and you need rules and regulators to steer and guard the market. I have never understood how Euro-sceptics miss that elementary point. I add, en passant, a single currency for a single market is singularly good sense. You do not need a common currency, but it is pretty daft not to have one. When will the Euro-sceptics concede that, to trade beyond your own back yard, you need agreement with other competing players in the market place? Some sovereignty must be pooled to gain national—British—penetration into other people's markets. To fail to do that straightforward business deal is to reduce Europe to a marquetry—not a market—of member states.
	Where are we today and what should the British Government do to bring about a fluid and flourishing single market in Europe, its size unparalleled in the trading world? The 1992 programme has come and gone. It was a partial success. We are still hesitating over the major directives needed for that market. The latest example is the hesitation over the services directive. There is also the monitoring, implementation and enforcing of existing directives. What about the opening of the gas and electricity markets? We have done it in the UK but have failed to extend it throughout the European Union. In practice, as someone from Centrica said to me today, they can come and take our jobs, but we cannot take theirs.
	The Commission's single market scoreboard is illuminating reading, and I hope that your Lordships will read it. We have much to do to complete that side of the market. We need to be ruthless in revising, simplifying and updating EU legislation. Many of my remarks echo those made by the noble Lord, Lord Vallance of Tummel, but what I would say about red tape is that, too often, we fail to understand that the whole market project is the creation of one set of red tape that is clearly understood and usable by all businesses to replace the 25 sets of red tape that so bind business people at the moment. Why do we not have a crusade in favour of the development of a single set of rules and regulations that can be understood by all?
	We must follow through the Lisbon agenda—I know that the Prime Minister is keen to do that—especially on some of its supply-side policies and the encouragement of research and development, which is at a much lower level here than in the United States. There is also education. Thirty per cent of young people in the United States are university students, compared to 19 per cent in the European Union. We must encourage lifelong learning. In a study carried out by Sub-Committee G of your Lordships' European Union Committee, under the astute chairmanship of the noble Baroness, Lady Thomas of Walliswood, we discovered that the importance given to lifelong learning by the Barroso Cabinet may have been reduced, despite the fact that it is at the heart of economic revival.
	There is also the question of languages. In this country, we are so tongue-tied. It is time that this country made the business case for languages. Not only do we need languages to trade with others but we need to understand their culture, which can be discovered through their language, in order to make the right goods and make available the right services to trade with other countries, especially in the European market.
	We need to explain the European Union and the single European market better than we have done hitherto and explain the opportunities that arise, especially for our business people and young people. I ask my noble friend the Minister to explain the Government's regrettable decision, as I understand it, to repudiate the €800,000 made available to this country to provide 40 European information centres. Other countries are taking advantage of the opportunity to spread the news about the European Union and the opportunities for businesses and charities to gain a better understanding of the market. Why are we holding back on it?
	I also encourage the BBC to report the European Union more accurately. Some of your Lordships may have heard the radio programme about the forthcoming EU constitution hosted by Clive Anderson last night. It resold us the old idea about being in favour of a superstate or against it. I have heard no one in your Lordships' House saying that the European Union was appropriate for a superstate.
	We need to make the market not just a market for big firms but for small firms. We still lag behind the United States of America, where 20 per cent of small firms grow larger and are viable. In comparison, only 5 per cent within the European Union turn from small size to medium or large. We need to improve the entrepreneurship take-up within the European Union. Again, comparison with the United States of America proves difficult. In a 2004 survey, only 40 per cent of our citizens said that they wanted to become entrepreneurial compared with 60 per cent of Americans. There is a particular gap with our young people, especially in schools and universities, being attracted by a business career.
	I echo what the noble Lord, Lord Vallance, said. At a time when we speak so Euro-sceptically in this country, is it any wonder that some of our businesses, especially our small businesses, resist the idea of setting up on the Continent and taking British ideas and opportunities there? If we keep saying to them—as it were, Jimmy Young-like—"sur le Continent there be dragons with funny languages and funny money", no wonder firms will not make an attempt to go there. Euro-scepticism costs jobs.
	I finish with an example of an industry that is nearly always neglected by all political parties in this House, not least my own—the tourism industry. It is the biggest responsibility in DCMS, but it does not even feature in its title and, I am sorry to say, was absent from the Labour Party manifesto. If ever there were an industry—and it is an industry—that is quintessentially an industry of the single European market, it is the tourism industry. It satisfies to a lesser or greater degree the four freedoms—the free movement of people; the free movement of services; the free movement of capital; and even sometimes the free movement of goods. But we do not seem to appreciate that.
	We do not see where we can compete and collaborate at the same time in the European Union. Perhaps we may think about a parallel of six restaurants in one location: they are competing with each other, but they also have the magical effect of attracting customers in the first place. We should do that for Europe, not only in the tourism industry but also in many others.
	I close with a reminder to my colleagues on the Front Bench. One of the first Acts of an incoming Labour government in 1964 was a development of tourism Act. They took tourism seriously then. We should take it seriously now as an important industry for the whole panoply of industry and employment in this country and in the European Union.

Lord Inglewood: My Lords, many noble Lords in today's debate have begun by congratulating the noble Lord, Lord McKenzie of Luton, on his promotion in the Government, and I would like to echo them. But I would also like to congratulate the Government on having chosen the noble Lord, Lord Dubs, and the noble Baroness, Lady Massey of Darwen, to move the gracious Speech. Both speakers have very strong north-west England links. That is appropriate because in the past eight years or so Parliament has spent a great deal of time talking about Scotland and Wales. In that period, it seems to me that the north of England and some of the other regions of England have become almost a kind of poor relation.
	In its own way, the north of England is as significant as either Scotland or Wales, yet obviously its relationship with London is clearly different, but it is none the less important despite that. Sometimes that relationship gets overlooked by London's metropolitanism, which we should all be conscious of.
	The debate today focuses on economic and industrial matters. I propose to start my remarks on that topic, but because this is the only day on which I can be here I should also like to move on to one or two others, which I understand is permissible.
	The gracious Speech focuses on legislation, obviously. Arguably, the most important economic legislation to affect this country in the foreseeable future and in the medium term was not touched on in it. I refer, of course, as did the noble Lord, Lord Harrison, to the Lisbon agenda, which was intended by the European Union to get European competitiveness back to an internationally acceptable level. Sadly, that process has degenerated into talk rather than progressed into action, as the European Council recognised when asking Wim Kok to draw up a report on its workings and which the Barroso Commission has endorsed.
	I should like to know from the Government whether we in this country will be in the vanguard of taking that forward. Now that the European Union has enlarged we have more allies who approach the world from the same perspective as us than we did in the previous Europe of 15 countries. The Lisbon agenda is something which, if it goes wrong, will render a great deal of domestic economic legislation nearly irrelevant if our economy should crumble in the face of Chinese and Indian tiger economies. It is as simple as that. If we do not get that right, a huge number of other things follow, almost all of which will be to our individual, collective and national detriment.
	Although it is often debated under its own heading, agriculture and farming are primarily businesses. I declare an interest as a farmer and a non-executive director of an agricultural supply company. While many people would welcome the changes proposed to the common agricultural policy by the mid-term review, I would like to know whether the Government are happy with the amount of bureaucracy that has been imposed by the paperwork inherent in the organising of the single farm payment system. I know from first-hand experience that it is driving many farmers and their advisers to distraction. The way in which the system is being administered is, on occasion, pettifogging. I heard of a case recently where a form was returned because the manuscript amendments on the plan had been initialled and not dated. I heard of another instance locally where it was said that a farmer rang to complain that one of his fields had been omitted from a plan which the Ministry had returned to him, only to be told that he was lucky—someone else had had the field included but the farm omitted.
	The system is not working as it should. I sense that a number of small farmers are finding the prospect of what the paperwork entails such that they are simply not bothering to return it. It is not surprising that in the past couple of days Tim Bennett, president of the NFU, was talking about the way in which small farmers are being driven out of agriculture by this reform process.
	Both in this country and at the European Union level we pay lip service to cutting red tape and bureaucracy. Yet how can one endorse that particular episode? I heard what the noble Lord, Lord Vallance, said about regulation in other areas. It is not simply a matter of pious expressions about the stewardship of public money; it is about arranging a system of regulation that can deal with the easily anticipated pressures that will be placed on it. If the Government regulate—and I think that it is inevitable and right that they should regulate from time to time—they owe it to those who will be affected by the regulation to do so in a manner that is cost-effective, efficient and businesslike. The quid pro quo for accepting the regulation is that the Government should regulate in an appropriately robust and sensible manner.
	At this time, it is also politically "cack-handed". Unlike many on this side of the House, I believe that the United Kingdom should be a leading participant in the European Union. In today's modern interdependent World, it is the system for collective decision making in Europe. These days, it is the only system we have. What has been happening in this area, and for that matter in many others, is that the silly little things which cause the trouble seem designed to encourage those who become disaffected to heed the siren voices proclaiming a unilateral approach as an alternative way of doing things interdependently. But there is no such alternative.
	Many of the policies that emerge from the European Union are no doubt ill-conceived, but that is true also of Westminster, of local government at whatever tier and of regional government. However, they can be changed only through the workings of whatever system of administration applies at the level at which they are formulated. We have to avoid throwing out the baby with this particular load of bathwater.
	I hasten to predict that when the moment arrives that this Government come to an end, one of the reasons probably will be excessive regulation, intervention and nannying. Recently a senior figure in Cumbria told me that if you count up all the quangos, agencies and local authorities within the category, there are now 49 separate "agencies" at work in the county. Frankly, that is absurd. For that reason, I welcome very much the idea behind the Government's proposal to bring together a number of agencies affecting rural Britain. But having brought them together, it is most important that they act in a sensible and responsible way so as to balance all the legitimate concerns of everyone affected.
	Equally, and subject to the same proviso, I welcome legislation on the management of common land. No doubt it will be the long-awaited follow-up to the Commons Registration Act 1965. A number of quite significant outstanding problems have arisen across England and Wales from the pre-enclosure Act system of land tenure. These need to be put on a proper footing, and I very much hope that they will be.
	I conclude with two constitutional points. First, on 17 March this year, the noble Baroness, Lady Ashton of Upholland said in response to an intervention of mine in a Question put by the noble Lord, Lord Greaves, about electoral fraud and malpractice that,
	"there was no evidence of a widespread problem".—[Official Report, 17/3/05; col. 1437.]
	Many of us did not believe it then and I am extremely pleased to note that the Government do not do so now, and that legislation is being brought forward to deal with the matter. The legal and political legitimacy of our electoral system depends on both participation and the integrity of the process. If either is lacking, the process is flawed. Let us hope that the detail of the Bill will deal with these substantive issues.
	Secondly, and I speak as an hereditary Peer lined up in the Government's sights, we must move towards closure on the composition and function of the second Chamber. We all love talking about it and we do so almost endlessly, but we are not as good at taking things forward. Once it is the case that some Members have been ejected from this House, the principle of possible ejection hangs over us all the whole of the time. I believe that will remain so until the chapter of reform is closed. The uncertainty is unsatisfactory both for us and more widely. The inability of Parliament to resolve these matters lowers its standing in the country at large. This issue needs to be progressed to a satisfactory outcome, whatever it might be. After all, there are more views on Lords reform than there are Members of both Houses combined and then squared. It is a matter for another day, but whatever is done must be done, and be seen to be done, in the wider public good and not gerrymandering for any particular interested party.
	Lastly, just as the law made by Parliament is subject to review by the courts, so law made by Parliament should be subject to parliamentary checks and balances in its creation.

Lord Tomlinson: My Lords, it is often said that all the best things come in threes, so perhaps I may start by welcoming a trio of things: first, the gracious Speech, which I warmly welcome; secondly, the appointment of my noble friend Lord McKenzie to the government Front Bench, where I am sure he will serve with great distinction; and, thirdly, the reappointment of my noble friend Lord Sainsbury, who already has served with great distinction and I am sure will continue to do so.
	It is no coincidence that the gracious Speech started with these two sentences:
	"My Government will continue to pursue economic policies which entrench stability and promote long-term growth and prosperity.
	To this end, my Government will continue to secure low inflation and sound public finances".
	Of course, no Member of this House could seriously challenge those objectives. The post-1997 record is good and even continued that which had begun in the latter days of the previous government. It would be churlish not to acknowledge that. But the positive changes that have started and the record of the eight years of the Labour Government should now bear the warning that past progress is no guarantee of future achievements.
	The Government have done many extremely good things. The Chancellor has clearly entrenched a sound monetary policy framework, a sound fiscal policy framework, a financial stability framework and a long-term public spending framework, all of which are in place and valuable. It is, of course, right and proper that, in order to ensure efficiency in public spending, such programmes are not regularly sacrificed as short-term expedients every time there is an expenditure crisis. However, the sine qua non of that statement is that the economy must continue to grow at the forecast rate and that the economic dynamic produces the revenue necessary without threatening the golden rules.
	The record is good and deserves praise. But today is not the day to praise; today is the day to worry slightly about the things that have to change, that have to improve and that have to at least continue. As I have said, past performance is no guarantee of future performance and I want to concentrate on three specific issues of concern where action is necessary if our enviable economic performance is to be sustained.
	First, productivity must be improved from our historically low levels of productivity growth. I am one of the people who welcomed the change to the new Department for Productivity, Energy and Industry, but, my God, what a disappointment it was to find that this new broom had disappeared within 48 hours. The emphasis on productivity and energy as well as on industry was symbolically very important.
	But it will be the policies on which the Government are judged and I am prepared to wait. I therefore welcome the statement in the gracious Speech that promises a reduction in regulatory burdens. But experience at the present time prevents me cheering and dancing in the streets because the gracious Speech merely promises:
	"My Government are committed to promoting efficiency, productivity and value for money".
	Surely, no one, apart from the Luddites, has ever opposed this. We now have to see the specific programme of action that will lead to the implementation of the promise. I should like to see my Government—the Government I loyally support—producing the check list against which they want their performance to be judged.
	We have been promised that,
	"Legislation will be introduced to streamline regulatory structures and make it simpler to remove outdated or unnecessary legislation".
	Again, it will be in the specific detail rather than the general statement in the gracious Speech on which the Government will be judged.
	But have no doubt that the performance is necessary and that the consequences of not doing it will be severe indeed. To meet the productivity challenge the changes to regulatory burdens must be such as to move us away from generalised complaints about level playing fields towards the creation of a capacity to compete in and respond to the opportunities of the rapidly changing global market. As I say, words on regulatory reform are easy; only actions will produce results.
	Those results must simultaneously deal with a number of very important issues, such as improving our competitivity and improving science and innovation, and the application then to manufacturing of the benefits of those processes while at the same time encouraging investment and seriously upgrading the skills of our workforce.
	When I look back over a long life in elected public office, continued now by the process of unelected privilege in your Lordships' House, the constant factors at every time in my life have been the complaints about skills shortages and the number of efforts, schemes and endeavours that we have had to create a better match between the demands of industry and the skill of our work force. Forty years later, the agenda is still exactly the same.
	I turn secondly to that which we must be able to have to fuel the increasingly productive, dynamic and competitive economy that I want. Here I have a regret about the gracious Speech, which is mute about energy policy. All the leaks and rumours since the general election have suggested that the Government were about to get to grips with the conundrum which passes as or poses for—I am not sure which—an energy policy. But conundrum it is. About a third of our electricity is generated from coal, producing carbon emissions which threaten our Kyoto obligations. About a third of our energy is gas-fuelled generation, but our current supplies are running out, and the alternative supplies are nearly all potentially politically volatile. The remaining third is a combination of nuclear, oil and renewables.
	It will come as no surprise that I say to my noble friend Lord Sainsbury what I have already said to him on a number of occasions—renewables are optimistically targeted to provide 20 per cent by 2020. Any shortfall there will be—and I believe that such a shortfall will be significant—plus the demands of the necessary economic growth to finance the public spending programme that I want to see protected and defended will either come from nuclear energy or will breach our Kyoto obligations when Sir David King, the Government's chief scientific adviser, has warned that global warming is a bigger threat to the world than international terrorism.
	Our economic prosperity demands continuous energy supplies. Our climate change obligations demand non-carbon emission-producing electricity generation. Grasp the nuclear nettle, and grasp it sooner rather than later. Vacillation is dangerous to our national economic interest.
	The third issue fundamental to our economic success is the European agenda, which has already been referred to. I have strong European credentials; I am, and remain, a strong supporter of British membership of the European Union. But the single market, for which we remember the work of the noble Lord, Lord Cockfield, back in 1992, is still not completed. Despite good words and the good progress that we are hoping might be made on the services directive, we have still seen vacillation to far too great an extent. That must cease, and progress must follow.
	The Lisbon agenda, so right in concept, is in tatters, and mocks its own ambitions. And yet every report from the presidency of a European Council meeting refers to the progress being made on the Lisbon agenda. It means that they never got round even to discussing the Lisbon agenda; it was stuck into the conclusions by civil servants who had written the report days before the summit took place. The only time they got round to discussing it was when Wim Kok forced them to, with his report. We must make progress on the Lisbon agenda, otherwise our claims towards global competitiveness mock ourselves.
	Something has to be done about the question addressed by the Chancellor of the Exchequer—the sluggish economic growth in Europe. It is not just something about which we can gloat and say, "We are doing better than them". Sluggish economic growth in Germany is denying our companies the opportunity of the great home market to which we so frequently boast that 60 per cent of our exports go. We must have a strong home market; that is something that the European Union was supposed to be a part of, and must be a part of. We therefore need a European agenda which is outward-looking and dynamic, and which recognises that EU tariffs, quotas and restrictive standards have been estimated as costing European Union consumers up to 7 per cent of the EU gross domestic product.
	The European Union agenda must cover multilateral trade reform and, as part of that process, CAP reform. I am tempted to say to the noble Lord, Lord Inglewood—he is no longer with us but I shall say it in any case so that he can read it—that if he is really worried about the bureaucracy of filling in forms for the single farm payment, he should join us in getting rid of so much of the unnecessary artificial subsidy in the common agricultural policy. By doing that, mathematically we will get rid of the threat to the UK rebate, which arises only because of the maldistribution of resources.
	Three successive Labour Governments have a good record, but there are always clouds on the horizon. It is axiomatic that I praise the Government and their achievements. They are significant, and of great benefit to the people of this country. But I merely warn that productivity, energy supply and the EU agenda all deserve consideration for that progress to be sustained.

Lord Wedderburn of Charlton: My Lords, I am happy to join my noble friends in congratulating my noble friend Lord McKenzie on the Front Bench and my noble friend Lord Sainsbury on his historic third ministerial manifestation. He represents a department which also needs congratulation on managing an extraordinary feat in Whitehall. It has resisted another forced marriage, having all its notepaper reprinted, to the benefit of the public funds, and remains the DTI, which we all love.
	It is about one measure—the last Bill to be announced in the gracious Speech—that I wish to speak. I remember being told, "You're last man in and although everybody wants to get to the bar, for goodness' sake don't give away your wicket cheaply". I intend to follow that advice by addressing one subject alone—the forthcoming company law reform Bill. The DTI notified us of it in March this year, after a three-year study by the company law review steering group finished in 2001. On 8 January last year, the noble Lord, Lord Patten, asked:
	"What do the Ministers in the DTI do all day long?"—[Official Report, 8/1/04; col. 273].
	Well, now they have told us, because we have the draft company law reform Bill, with 239 clauses and several schedules. Given what your Lordships have said about the economy and the like, this measure, although the last in the gracious Speech, may well be the most important to come before you.
	In 2004, the DTI produced a small aperitif of an Act on companies and hurried forward a regulation on the operating and financial review. It should have been a Bill so that we could have amended it, but never mind. It carried on with the consultation, which, as usual, is largely confrontation with the City and should have been much wider. When the director of the steering group of the company law review was asked in 2001 what would be his assessment of the effect of the three-year review, he replied that it was like Mao Tse-Tung's assessment of the French Revolution—"it is too early to say". The time for that leisurely approach has now gone and the Bill will come before Parliament at last. I will address two or three aspects of it.
	The Government are right not to wait for some Enron or Parmalat, another Longbridge or some hedge fund disaster to force company law to the attention of the two Houses. In my 40 years of teaching and research in company law, I always found that students began with the notion long put forward that company law is not a sexy subject. After a few weeks of due instruction, they usually found that it was, because it is the area of law that takes the social pulse and tests the sinews of corporate entities small and big, some now so large that, like multinational mobile colossi, they bestride the world and have power equal to that of the state, if not more. Those who lust for a further era of privatisations have a special duty to make sure that the companies that are to receive the favours are governed by an appropriate body of law.
	It is therefore sad that the DTI document begins with the rather downbeat sentiment:
	"Company law can be very complex".
	It is sometimes complex, but that is no excuse for delay in getting this Bill on to the statute book. We have the good fortune of the technically admirable company law review and final report of 2001 on which to build.
	However, a lot has happened since 2001. Investment and finance in particular have now entered what may be called their era of nanotechnology in the mysterious and inadequately regulated planet of hedge funds, derivatives, contracts for differences and the like, leading to short-termism and great secrecy on the part of powerful private equity firms. Today, those firms control companies that employ one in five of the workforce and many, from the Takeover Panel to the chairman of Cadbury-Schweppes, have said in the last week that there is a need for further regulation of this area in the public interest. I take it to be a good precept in company and financial services law reform that when the likes of the chairman of Cadbury-Schweppes calls for action, all Sainsburys should pay instant attention.
	It is therefore surprising that the review—and, to some extent, the government draft Bill—makes a clear choice on the fundamental question posed for every system of modern company law in similar mixed societies. That is, for whose interest should the company be run? Is it to be a mix of interests of all the stakeholders, shareholders, creditors, employees or the community? Despite the scepticism of English lawyers, who have no comparative understanding, there are such systems. Or, must it be run directly in the interests of shareholders alone? The traditional English answer has always been that the company must be run in the interests of the shareholders on a long-term view—the members, as they are still called, for historical reasons—although indirect account can be taken of other interests if they affect the longer term interest of shareholders. As Lord Justice Bowen declared in 1883:
	"There are to be no cakes and ale except . . . for the benefit of the company".
	He meant the interests of the shareholders.
	The final report of the review effectively confirmed the same criteria, although it expressed the need to look at the subject broadly and called it "enlightened shareholder value"—the company must be run in the interests of a good-hearted shareholder. In truth, the new slogan was spin to hide the traditional test and the company must be run by the directors in the interests of shareholders. Even a badly drafted Conservative law of 1980, which put employees among the interests that directors must consider in law, should be repealed.
	The proposals of 2005 are profoundly encouraging in one respect and worrying in another because in the DTI's new version of a statutory statement of directors' duties, which is the most important part of the draft Bill, the new statutory provision continues to set out, in the words of the draft clause, that directors must consider,
	"in good faith, [what] would be most likely to promote the success of the company for the benefit of its members"—
	shareholders—
	"as a whole".
	In doing so, directors must take a long-term view and indirectly consider relationships with suppliers and customers and so forth. However, in the draft Bill—and this is encouraging—whereas the review merely told the directors to consider their relationships with employees, the draft Bill now states that directors must,
	"take account of any need of the company to have regard to the interests of its employees".
	That is not a drafting point, it is fundamental. The interests, not the relationship of employees, are on the agenda.
	This development in the Government's thinking is one from which they must not be shaken by any criticism from wherever it comes. Nor must the Government give way to criticism of the stringent statement in the draft Bill of fiduciary duties of directors and other officers and standards of negligence. We all know that current events before the courts are raising the question of directors' negligence, and therefore, one must not comment. But whatever the courts will say about the negligence of directors, the liability of any particular person in court, friend or foe, is not necessarily a good basis on which to change direction in company law reform.
	The most important development in company practice since 1990 has been one with which the company law review did not deal at all, and on which ministerial statements and policies have been totally inadequate—especially in the face of dozens of Questions, asked notably by my much-missed friend Lord Dormand of Easington, to whom I pay tribute. To quote from a publication of my own which is in the Library with 330 footnotes of evidence, your Lordships may like to consider the following proposition:
	"In the past decade there has been a massive rise in the benefits taken from the corporate enterprise by top executives and controllers"—
	or, as American colleagues researching in the field put it—a huge increase in "rent extraction" by top executives. This is not just a limited issue of rewards for failure as in the second Marconi scandal; this is a question that crosses the whole field of large corporate enterprise today. It takes the form of salaries, fees, bonuses in cash and kind, shares, share options, incentive schemes short and long-term, golden hellos, expenses, golden handshakes. As the late Lord Young put it, there are now all manner of new ways for people to feather their own nests in this area. We may not yet be in the position that Professor Galbraith described the United States as being in where he said that the compensation taken by chief executives of corporations were really a vote of warm self-confidence in themselves, however, we do have a situation whereby one fund manager said two years ago that directors are deciding their own pay; they sit on each others' boards, and they are pushing only one way. The Guardian on 4 May did a survey of 200 companies, every single one of which was aiming at massive increases next year in top executive reward. By itself that may not be important, but it is important to workers who see their pension funds disappearing and find that their jobs are cut. Noble Lords will find, in the publication I cited, examples of companies where those two things go together.
	This is not just a British phenomenon. The idea that this is some special Anglo-American problem is absurd. Workers is in France who were on strike for a further €50 a month were not pleased to find that their chief executive was in receipt of €9.9 million, and €25 million on a five-year pension plan. It is well known throughout Europe that this issue is a new one, which goes to the heart of the justifiability of the system that exists in society and about which one is not supposed to speak in polite circles.
	I cite for your Lordships what Anthony Sampson said in his publication last year, which was an admirable survey of, as he put it, Who Runs This Place? He said:
	"The centre of the Establishment has moved away from Parliament and cabinet and towards corporate boardrooms . . . Directors have become more self-contained and interlocked with other companies, inhabiting a narrow world of their own".
	He said that directors are often part of what used to be called an old boy net, with,
	"too narrow a gene pool",
	but added that the,
	"shareholders, employees and other stakeholders were conspicuously absent from the network"—
	in his research.
	The company law Bill to be set before us is not one simply to pacify the fans at the Stretford End in Manchester, or to deal with some particular problem. It has an obligation to the country to bring modern company law up to a modern standard in regard to the particular process of the increase of power in a particular area of top executive pay. Policy so far has totally failed in that area. Advisory shareholder resolutions, non-executive directors and various other schemes of that sort just have not worked. In particular companies there have been odd incidents where they have helped, but as a general recipe for an answer, the Government must add to its draft company law Bill something more satisfactory.
	Finally, today globalised capital has acquired a power that rivals and sometimes overrides that of the state. It is therefore very odd that the new ideological narrative of the company review, as published on the web, is to think about small companies, not large ones—to look at the small companies, draft for them and then add on something for the big ones. That is a totally new approach which needs to be rethought. There must be something in the Bill, not only about small companies—although I understand the reasoning for their inclusion—which indicates just what the add-on will be for mobile global capital, which includes vast areas of corporate networks; that is, unless the Government feel so powerless in the face of that power that they dare not legislate with the big international companies in mind.
	Of course, this is not a modern predicament alone, even if it is rather more difficult than ever before. From Hardie and Maxton to Attlee and Bevan, the dilemma of facing a corporate network which made legislation difficult has always been there for a Labour Government. The supporters and members of the Labour Party, of which I have been one for 60 years, know very well that for a Labour Government of principle, principle urges action but pragmatism urges restraint. The company law Bill is so far a framework which can match those two government objectives very well. The nettle of corporate law reform of a very ancient legal system is now within the Government's grasp—and from it I confidently predict that it will produce an admirable flower of new company law.

Lord Razzall: My Lords, in winding up from the Liberal Democrat Benches on this important debate on the gracious Speech, I first join with other noble Lords in congratulating the noble Lord, Lord McKenzie of Luton, on his well-deserved promotion, and adding my congratulations to the Minister on his reappointment. It is personally reassuring that in all the vicissitudes of life, the noble Lord, Lord Sainsbury, will always be with us.
	I share the views of my noble friend Lady Thomas of Walliswood, who expressed some surprise, as we did not think that we had come here to deal with an attack on Liberal Democrat policies in the election, easy as they are to defend. I suppose that the noble Lord, Lord Marlesford, who I see is not in his place, perhaps regressed to his early days as a paid researcher for the Conservative research department in central office—or maybe it was as one of Ted Heath's special advisers. I was also somewhat disappointed, although I sympathise with the temptation, by the barrack room intervention of the noble Lord, Lord Tomlinson, in particular because when he made his speech I cannot think of one word that I disagreed with. No doubt the Hansard writers will put that in and delete his intervention, on the grounds that I have recovered the ground with him.
	In one sense, the debate on the gracious Speech immediately after an election requires spokespeople for political parties to some extent to state where we stand on the issues relevant to the debate. First, let me say absolutely and unequivocally that the Liberal Democrats stand for a free market. We believe that there is no more important role for a government than to create a culture and environment in which business thrives—or, to put it another way, to encourage the random efforts of individuals throughout the United Kingdom. Those random efforts produce the prosperity from which we all benefit, and without them we cannot have the public sector improvements to which we all aspire, as the noble Lord, Lord Tomlinson, said.
	I agree with the comments made on this side of the House, although not that many were made from the Conservative Benches, that the Government deserve congratulation on the way in which they have managed the economy for the past eight years. I shall not make the party political point about our policy on the matter, but clearly the decision to give independence to the Bank of England has provided the macro-economic stability which the country needed after the period of stop-go, stop-go under the previous administration—to use the phrase that Gordon Brown so loves.
	However, having listened to the Chancellor at the CBI dinner last night, those who were there will wonder whether sometimes the self-congratulation is marginally overdone. There have been other factors which have led to the relatively benign economy that we have had in this country since Labour took over. I would highlight three factors. First, we were fortunate that the devastation of manufacturing industry that occurred during the Tory years occurred before the serious invasion from the Far East into the manufacturing capability. We now have an economy in which, with luck, only 20 per cent constitutes manufacturing—and probably only half of that is manufacturing as we originally knew it, because the other half is assembling parts in the UK which have often been made overseas. So to an extent, while the gales of competition from the Far East have battered the United States, France, Germany and the other major manufacturing economies, this Government have been lucky that Margaret Thatcher, dare I say it, did their dirty work for them 20 years ago in eliminating large swathes of manufacturing industries by the economic policies that the Tories adopted during that period.
	The second fortunate result that the Government have had is that as a result of the disappearance of the low value heavy weight industrial base that we used to have, we now have a number of areas such as financial services, computer related services, leisure and high technology services, which, in the case of the first two, have high added value. The terms of trade for those services have been very beneficial to the United Kingdom over the past few years. In the third case of leisure, clearly that is not subject to competition from the low wage economies of the Far East. The Government have been lucky in that respect.
	Thirdly, the Government have been lucky in inheriting a deregulated economy by comparison with almost all our other competitors. It is on that area that I want to focus and follow on from the comments of my noble friend Lord Vallance. It is in the area of regulation that the Government are in danger, unless they are careful. I shall not go quite so far as the president of the CBI who yesterday mentioned killing gooses and use the unfortunate analogies that he used. However, having listened to the Chancellor and the president of the CBI last night, I hope that we are not moving into a period in which the CBI takes the view that everything the Government do is wrong and the Chancellor takes the view that everything business does is wrong. It is very important that the developments which occurred, particularly under the presidency of my noble friend Lord Vallance, should continue and that the dialogue between government and the CBI should not break down.
	I thought that the president's speech which I heard at the dinner last night could just as easily have been delivered during the 1950s when capital was opposed to labour and the horny sons of toil, or ordinary working people, as Labour so loved to call them, were in its eyes being persecuted by wicked employers. I hope that that will not be the case and that the dialogue between the two will continue.
	However, we must again give the Government credit for what they have done as regards deregulation and the abolition of regulations. The Better Regulation Task Force under the noble Lord, Lord Haskins, and now under David Arculus is doing very valuable work in this area. In the run-up to the election, during the election and, indeed, since we have heard a number of fine speeches and fine statements on that matter from the Chancellor of the Exchequer. For example, buried about the time of the Budget was a statement by the Chancellor of the Exchequer that we should introduce a system under which for every regulation that was introduced one should be removed—the one in, one out principle.
	There has been a proposal from the Chancellor of the Exchequer or the Treasury that there should be a common commencement date, certainly for employment regulations. There should either be one or two commencement dates—6 April or 1 November. Indeed, I believe that it is proposed to move to only one commencement date for employment regulations. There has been another proposal from the Chancellor or the Treasury that the Government will embark upon the measurement of the administrative burden of regulations so that we can measure what the cost to the British economy is of the burden of those regulations.
	Last night in his speech to the CBI the Chancellor indicated that he would introduce a major culture change regarding form filling and regulation for business. A major culture change was promised to the business community last night. The concern of noble Lords on these Benches is that the words are fine but, unless I am completely mangling a metaphor, fine words butter no parsnips. What we really want to know from the Minister when he responds to the debate is what practical steps—I follow the speech of my noble friend Lord Vallance—will the Government take to implement these perfectly worthwhile objectives? For example, will the Minister confirm that the one for one undertaking is copper bottomed? Are the Government now saying that for every one regulation that is introduced another one will be removed? Will the Minister confirm that there will be a common commencement date for not only employment regulations but for all regulations so that business knows that they all come into effect on either one day or two days? Will he also confirm that the study of the measurement of the administrative burden of regulations will take place?
	I understand that the Dutch have calculated that 3.6 per cent of the Dutch GDP was going on the administrative burden of regulation. Therefore, on that basis a 25 per cent cut in the administrative burden of regulation would add 1 per cent to a country's GDP. Are the Government prepared to say what target they will set in that regard? Will they confirm that there will be a measurement of the administrative burden of regulations and, if so, what target will the Government set for the efficiency savings to come from the abolition of the appropriate number of regulations?
	As my noble friend Lord Vallance indicated, we are sceptical that without specific proposals from the Government, fine words will not result in action. As the Minister will be aware, the Liberal Democrats' election manifesto contained three specific proposals in this area to which my noble friend Lord Vallance referred. First, it stated that no new regulation should be passed until a full assessment of its costs and the necessity for it is published. Secondly, as regards the point that my noble friend made about a sunset clause, our manifesto stated that any new regulations affecting business would automatically be scrapped after a period unless Parliament specifically approved their renewal. Thirdly, our manifesto included a recommendation to rationalise inspection procedures so that all sorts of inspectors would be replaced by one all-purpose inspection. The answers that the Minister gives to my specific points will be very important.
	I refer to the role of the Department of Trade and Industry. As the Minister and noble Lords will be aware, we on these Benches advocated in the election campaign that the DTI should be abolished. When we say "abolished", we thought that some activities of the DTI should be stopped altogether, some activities should be devolved to regional government and that some activities should be devolved to other ministries. I wish to indicate three reasons why events have demonstrated how prescient we were in this area. First, can anyone really say that the behaviour of the Department of Trade and Industry over the Longbridge saga was a feather in its cap justifying its continuation?
	Secondly—and this is a fundamental point—your Lordships will have noted that when I listed all the proposals we have heard from Her Majesty's Government regarding the abolition of regulation, nowhere did I say that that was proposed by the relevant Secretary of State for the Department of Trade and Industry. In every case these proposals have come from the Chancellor of the Exchequer and the Treasury. Where is the DTI in this? If the Chancellor of the Exchequer is to do that, what is the role of DTI here?
	Thirdly, I cannot resist following the noble Lord, Lord Wedderburn, on the matter of the name. I never thought that if we were to propose the abolition of the DTI, the Prime Minister would assume that he had dealt with that proposal by simply changing the name and leaving the functions. Until the noble Lord, Lord Wedderburn, explained the matter I did not realise that expense had been entered into regarding stationery and signs. Bearing in mind the acronyms that were being produced for the new ministry which ranged from—dare I say it?—PIE through to PENIS, it is no surprise that the Government quickly changed their decision after 48 hours. On the assumption that on the Floor of your Lordships' House the Minister will not concede that he has listened to our arguments and the DTI will be abolished, I urge him to follow the advice that came from behind him.
	When Peter Mandelson was the Secretary of State for Trade and Industry, he produced an extremely effective White Paper—although it was not white; it was all coloured, because that was the Mandelsonian style—that contained tasks and objectives against which the performance of the DTI could be measured. Is the Minister prepared to renew that exercise and produce a statement of the objectives of the DTI in detail over the next year or two against which your Lordships and those in another place can monitor the progress of the DTI on those difficult issues?

Baroness Miller of Hendon: My Lords, like my noble friend Lady Noakes and other noble Lords, I congratulate the noble Lord, Lord McKenzie of Luton, on his elevation to the Front Bench. I wish him well, but not too well when I am on the opposite side of the Dispatch Box.
	At first sight, it was reassuring that the Government have made this important debate the first of the new Parliament in this House. However, after the previous Parliament was dissolved, a major motor manufacturing company went into receivership with the loss of thousands of jobs both directly and among its suppliers. My noble friend Lord Trenchard mentioned that. A major electronics firm, Marconi, has had to announce the loss of thousands of jobs due to the lack of orders from domestic telecom companies. The European Parliament voted to impose the 48-hour week on the United Kingdom, and high street retail businesses are now suffering a decline in trade described as the worst in 15 years. The foreign owners of Abbey bank are cutting 1,000 jobs in addition to the 3,000 that they have already announced.
	On taking office, what was the first action of the new Secretary of State? The noble Lords, Lord Tomlinson and Lord Wedderburn, both mentioned the change of name. I heard also what the noble Lord, Lord Razzall, said but my understanding was that they were going to spend, if they had not already done so, £500,000 on the change of name.
	What did our new Secretary of State have to say about the 48-hour week when challenged in a TV interview? He said that it was not government policy, and claimed that the fact that the Labour MEPs had unanimously voted in favour of it was due to,
	"the peculiarities of the European Parliament's voting system where Labour MEPs were bound to vote with the socialist group".
	The socialist group, my Lords? There we have it—the "s" word. It remains to be seen what more might happen. I know how pro-Europe many noble Lords are around this House, but I wonder if we were to give away much of our sovereignty what would happen if we had more things like that happening.
	Other noble Lords have reminded us of the stifling effect of the over-regulation that British industry and commerce have had to endure under this Government. Piled on top of the annual £7.6 billion of extra taxes—extra taxes, my Lords—that this Government have imposed on business since they took power in 1997, the cost of new business regulations comes to another £7.4 billion a year. That is a staggering additional £15 billion a year burden that this Government have imposed on business. Since 1997, the cumulative tax bill imposed on British business has reached £54 billion, and the cumulative regulatory compliance cost has amounted to nearly £40 billion since the same date. No wonder this Government have presided over the continuing decline of British industry. If you ever heard the sound "whoosh", that is the sound of British jobs disappearing in the direction of eastern Europe, India and China. You hear of call centres in India in particular where the work is going over there instead of staying here. We do not want this country to be a low-wage economy, but we do not want this country to lose its competitive edge with high business taxes and regulation piled on top of over-regulation. As if that were not enough, we have the constant gold-plating of regulations, as mentioned by the noble Baroness, Lady Miller of Chilthorne Domer.
	It is for that reason that we give a cautious welcome to the concept of the proposed new regulatory reform Bill. We Conservatives said that we would have done something fairly similar, but of course, like all the new Bills proposed, we will scrutinise it very carefully.
	Still on the subject of regulatory reform, I impress on the Government that the impact of the regulations that they have imposed on business in practically every area impinges disproportionately on small businesses. Large concerns can easily absorb the need to employ additional staff or to accept extra duties for the conduct of their business. In small businesses, those extra costs can be crippling. For example, only last week I received a letter from my local fishmonger in Marylebone. After three generations running their shop, they have had to close because of the impact of the congestion charge, which cost them over 20 per cent of their trade overnight. The shop has closed because they simply could not go on after 100 years in business. The young member of the family, the fourth generation, is out of work. The disaster that that little family business has suffered is a microcosm of what has happened to its larger neighbours in the once-prosperous West End shopping district. Of course, I appreciate that that is not all the fault of the Government. If they wish they can blame a large part of it on their comrade Ken Livingstone, who they conveniently welcomed back into the fold.
	I believe that the seven Ministers in the DTI should have a plaque on each of their desks to remind them that 99 per cent of United Kingdom businesses are classified as small businesses. On the basis of the Government's statistics, small businesses provide 46 per cent of non-government employment and 38 per cent of United Kingdom turnover. The Federation of Small Businesses estimates that small businesses employ 12.6 million workers. However, when the Government legislate and impose new regulations, they do not often distinguish between giant multi-nationals and the corner shop or the tiny business filling a niche market.
	Then there is the Government policy that is in the process of destroying the traditional village post offices at the hub of their communities by the way in which they will be paying pensions and other social security benefits. I appreciate that the Government say that they are paying subsidies, but the subsidies being paid to those shops are less than the Treasury is trying to save in its own overheads.
	Never mind about the regulatory impact studies. The Government should always consider the law of unintended consequences. Talking about the Post Office, even though, as the noble Lord, Lord Sawyer, said, there was no mention of it in the gracious Speech, perhaps the Minister can enlighten us on another topic. The noble Lord, Lord Sawyer, took a whole page of my speech. I thank him in a way; it is nice that I can be somewhat quicker. I confirm that in the manifesto we were assured that the Government had no plans to privatise the Royal Mail—in effect that the Royal Mail was safe in their hands. Yet, we hear about the chairman, Mr Leighton, running around the country trying to sell off bits of it, and we hear, as the noble Lord, Lord Sawyer, said, about them thinking of turning it into a John Lewis-kind of organisation. For the sake of certainty and for the sake of the peace of mind of the staff who work there and the customers alike, perhaps the Minister will tell us today what is going on in this area. Who is in charge of the policy? The Government? Or Mr Leighton? It would be nice to know.
	Various noble Lords have mentioned energy, which is one of the most important problems facing our country today. I remind noble Lords that during the passage of the Energy Act last year, we on these Benches with the assistance of the Liberal Democrats and many Cross-Bench Peers, forced an unwilling Government into a grudging acceptance of the fact that the ultimate responsibility for security of supply rests with them. I have searched in vain in the gracious Speech for any reference as to how they intend to implement that duty. It was in the Act. Where are we going? What will happen in this Session about it?
	I remind the Government of something that, on every occasion when energy has been debated in the past couple of years, does not seem to have penetrated their collective consciousness. Our domestic supplies of fossil fuel—oil and gas—are almost exhausted. The coal on which this island is virtually built is either uneconomic to recover or ecologically and environmentally unfit to use, especially in the light of the fact that there is lack of support from the Government for clean coal technology. I say that because China is developing its technology, but would cry out for information from us. That could very well be a huge, invisible export if we developed it in this country.
	Energy from renewable sources and our pledge to meet the Kyoto targets are all right and proper, and I applaud them, but the fact simply is that experts say that we will not reach those targets depending on present forms of energy alone. We have to go a little further. No other renewable sources, such as tidal power and biomass, are even properly off the drawing board. With what are we left? The Government are not pushing energy efficiency as much as we think that they ought to. Microgeneration could play a much bigger part. Indeed, heat and power—

Lord Sainsbury of Turville: My Lords, I was going to make the point that I failed to hear what the noble Baroness's bet was to be, and I thought that that reflected her prudence as an accountant. I should be very interested to hear what the nature of the bet would be in the future.
	In answer to a question about a further Finance Bill, we shall be introducing such a Bill in the House of Commons shortly.
	I very much welcomed the comments of the noble Lord, Lord Newby, on economic immigration. He was right to say how important it is for economic growth. However, I am not so certain that I agree with his comments about RDAs and freedom and flexibility. In this country we have to learn that in situations of devolution or delegation of responsibilities, those need to be managed within a national framework. One needs to set some parameters from the centre; otherwise, every area will go off and have its own schemes and so on, whether it is in the field of business support or in the skills and learning arena. From the point of view of businesses which now operate on a national level, that can be extremely difficult and will simply return us to the situation that we had five years ago with hundreds of different schemes. So we need to manage this issue with delegated responsibilities within a national framework.
	I am not certain that the right reverend Prelate the Bishop of Worcester was fair to say that the Minister had not dealt with matters of importance for many poor people. He went on to talk about consumer debt, and the Minister had just talked about the introduction of the Consumer Credit Bill, which has, as one of its primary purposes, protecting vulnerable borrowers.
	It should also be said that economic stability is extremely relevant for the most disadvantaged people. It has enabled the introduction of significant expenditure programmes which are focused on the most disadvantaged.
	I say to my noble friend Lady Thornton that consultation is fundamental to our deregulation agenda. We shall continue to support social enterprise, as we did in the previous Parliament. The Government published a White Paper on the companies Bill on 12 March, and time remains for all parties to respond to the consultation.
	I say to the noble Baroness, Lady O'Cathain, that I do not think it is right to ask the Queen to go into complex economic forecasts in her gracious Speech. Inevitably there will be a few—I hope, succinct—phrases about the economic policies of government rather than a description of the public finances. I should point out that the Minister anticipated many of the issues that we shall need to watch. To me, that does not suggest complacency. Again, I remind the noble Baroness that the Consumer Credit Bill is being introduced to help to deal with the whole problem of debt.
	Consumer growth is slowing but the economy is in the process of rebalancing, with business investment and exports beginning to contribute more to growth. Also, retail sales contribute only a third of consumer spending.
	We totally agree with the right reverend Prelate the Bishop of Liverpool that we should strive continuously to encourage more entrepreneurs to set up in disadvantaged regions. However, it is wrong to suggest that industries are concerned only with producing products and services with less labour. The use of fewer resources and materials is also often now a key consideration for business and a considerable amount of research is now being dedicated to this issue.
	I thought that the speech of the noble Lord, Lord Marlesford, was excellent. It showed the true independence of the House of Lords. His suggestions for raising further revenue also showed great independence, and I shall watch with interest whether the Conservative Party takes them up as official policy.
	The noble Viscount, Lord Trenchard, repeated a point made by the noble Baroness, Lady O'Cathain—that is, that roughly a quarter of the 51 quarters of continuous growth took place under the previous government. I make the point that it is not too difficult to get growth growing; the difficult task is to keep it going. That point was demonstrated again and again by the Conservative government when they were in power. It is easy to get the growth going; to keep it going for 52 quarters is a substantial achievement.
	I do not want to get into complex tax discussions at this hour of the evening. I simply point out that the so-called stealth tax on the pension funds was in fact a reduction in advance corporation tax. The Conservative Party had also reduced that tax, and general opinion was that it was a very bad way to run one's tax system. It was also compensated for by lower corporate tax. I am very clear about this matter because, having been a finance director for many years, I am well aware of how advance corporation tax works. That is what it was about. The measure obviously has an effect on pension funds but one must also take into account that businesses come out of it better because of the lower corporation tax, with the result that they could put more into their pension funds.
	It is wrong to say that the problems of the pension industry are due solely to that issue and to ignore what we all know took place over that period—that is, pension holidays were taken by pension funds. Having been involved in business myself during that period, I look back with horror at the fact that businesses, including my own, took pension holidays. One could argue the case for those, but account had not been taken of the fact that there would be periods going the other way, and the benefits in the pension funds should have been kept there to be used subsequently. That issue should not be forgotten.
	The noble Baroness, Lady Miller of Chilthorne Domer, raised the question of the regulation of supermarkets. Over my seven years as a Minister, I have learnt that I am not in a position to give an objective view on the regulation of supermarkets, and I shall ask the relevant DTI Minister to write to the noble Baroness in response to those points.
	I very much enjoyed the speech of the noble Lord, Lord Selsdon, on space and many other issues. I totally agree with him that this is an enormous area of science, as demonstrated by the Cassini-Huygens mission and by the Galileo project, which is enormously important from a commercial point of view. I am afraid that the DTI civil servants are still searching for our briefing on Copernicus, so I did not feel that it was right to ask them to provide a quotation about gravitational waves, but no doubt on another occasion we can take up that issue.
	The noble Lord, Lord Vallance, raised the issue of Europe, which is a large subject. It is fair to say that the European Commission and the member states are beginning to focus on deregulation. Interestingly, at a recent Council meeting, Commissioner Verheugen of the enterprise side, said that he wanted to be judged on his performance on deregulation. Whether he can deliver on that is another matter, but I believe that the Commission is becoming focused on this issue and that the UK has played a leading role in putting that at the top of the European agenda. I agree with the noble Lord, Lord Harrison, that there are huge opportunities in Europe, in areas such as energy, liberalisation and the services directive.
	To the noble Lord, Lord Inglewood, I say that I do not believe it is correct to say that the north has lacked attention in economic terms from this Government. I believe that the regional development agencies in the north-east and the north-west, and particularly their science and industry councils, are carrying out an extremely good job in trying to raise economic performance, not by moving jobs in, but by creating the right and best conditions within the regions. It is a mystery to me why the Conservative Party, with its focus on regional policy, continues to talk about getting rid of the regional development agencies, because that is a mechanism to create growth and change within a regional economy.
	I am unable to give an answer on single farm payment systems at the moment. I shall write to noble Lords on that. During our presidency we shall be pushing the Lisbon agenda very hard.
	I join the noble Lord, Lord Sawyer, in congratulating the management and the unions on their transformation of the Royal Mail. In case there is any doubt, I make it absolutely clear that privatisation of the Royal Mail is not on the Government's agenda. There are no plans to dispose of the Government's shareholding in the Royal Mail. However, we cannot control what the newspapers say in a speculative manner on such issues.
	I agree with my noble friend Lord Tomlinson that I was not greatly enthused by the proposal to call the DTI the Department of Productivity, Energy and Industry. Besides the obvious abbreviation of that name, the fact that industry and productivity are portrayed as two different concepts appears to be stating the problem rather than the solution. However, I am glad to say that the first action of our new Secretary of State was to get rid of the name. It was even suggested to me that Downing Street had set this up to make him look good on his first day at the department.
	The noble Lord, Lord Razzall, said that we have had a very benign environment for the economy. I do not believe that that is totally fair. While in government we have had the Asian crisis, when Korea nearly went bankrupt; we have had the Russian crisis; we then had the IT crisis, followed by problems at the Stock Exchange; and then the US downturn spread across Europe and Japan with world trade growth stalling for the first time for decades at zero. So it has not been a totally benign environment, although some matters have gone our way.
	The marked comments of the noble Lord, Lord Razzall, about the DTI simply illustrated how little the Liberal Democrats know about the actual work of the DTI. We have clearly set out our objectives in our five-year plan and we can be measured against them. It was revealing that he admitted that essentially the Liberal Democrats' plan was not to get rid of the activities of the DTI—one cannot do that as most of them are matters that have to be carried out, whether in relation to the Patent Office or company law or employment tribunals—but it was simply concerned with moving things to other parts of government. Of course, there is nothing wrong with that, but then to claim major savings is to misunderstand the situation.
	The noble Baroness, Lady Miller of Hendon, mentioned the figure of £40 billion as the cost of regulation. Of course, that is not the cost of regulation, but it is the cost of doing what regulation requires, like the national minimum wage or longer holidays. The administration part of that is very small. If one wants to say, "We shall save that £40 billion", then one must say what one will put in reverse. Will one go back on the national minimum wage or on the issue of length of holidays?
	My noble friend Lord Haskel made a number of points. We have only just introduced the Sciencewise programme, but I am encouraged by the response we have received to that. I agree with much of what my noble friend Lord Bhattacharyya said about the importance of technical change and the need to link engineering and technology with science. As someone who has an MBA, I entirely agree that having an MBA is no substitute for understanding the customers and technology of the business in which one works.
	On the company law reform Bill, I say to my noble friend Lord Wedderburn that we have published a paper.